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Barclays chief C.S. Venkatakrishnan doubled down on doing business in the United Kingdom even as the British bank faces the growing threat of higher taxes in the country. The executive’s optimism comes as analysts and investors widely expect the U.K. government to target the U.K. banking sector for tax increases in the upcoming Autumn Budget to help plug a growing fiscal hole. When asked about the competitive environment for the banking sector amid the threat of increased taxes, Venkatakrishnan warned that “milking the financial sector is not good, because it stifles investment. “It stifles competition, stifles growth,” he said. “You need to encourage it to grow, not tax it out of existence.” Despite the threat of additional levies, Venkatakrishnan reaffirmed its commitment to the UK. “We are very happy to be here and happy to be in London,” he told CNBC from the east London financial district of Canary Wharf, where Barclays moved its headquarters in 2005. Bank of America analysts estimate a potential tax hike could shave around 1.5% off Barclays’ 2026 profit, illustrating the political risk now facing Britain’s financial giants. Shares of Barclays and the wider banking sector fell sharply after speculation around the potential for the bank tax emerged in late August. BARC-GB 1Y line Earlier this month, Venkatakrishnan criticized the proposals, warning that the ” facile and fallacious logic ” behind such a move would compel the lender to cut back on hiring and reduce lending to the British economy. “We would have to find ways to get greater productivity, pull back on hiring, and actually issue less credit into the U.K. economy,” he said, explaining that the bank “wouldn’t have as much capital to reinvest back into the system”. More than 50% of the bank’s revenue was generated in the U.K. as of December 2024, according to FactSet data. That threat of a hike in taxes on banks remains large as the government searches for revenue. BofA analysts suggested earlier this month that a potential growth downgrade and spending policy reversals could create a £20 billion ($27 billion) to £30 billion fiscal deficit, making tax rises likely. The analysts identified the likelihood of an increase in the 3% banking surcharge, which was at 8% as recently as 2023. Analysts have also long pointed to a “London discount,” with U.K.-listed banks trading at lower valuations to their U.S. peers. Research from UBS noted Barclays shares trade at just 0.9 times the lender’s tangible net asset value for 2026, while BofA analysts call it “one of the cheapest banks in the sector” on some metrics. This valuation gap exists despite Barclays’ investment bank, its most global division, successfully competing with and even outperforming its larger American rivals in some business lines. In U.S. dollar terms, Barclays’ investment bank revenues rose 21% year-on-year, outperforming the peer group average that includes JPMorgan , Goldman Sachs and Morgan Stanley . The bank is also halfway through its three-year turnaround plan launched in early 2024. The plan aims to reallocate up to £30 billion towards higher-returning U.K. operations by 2026. Venkatakrishnan told CNBC that the bank has already deployed £17 billion, ahead of schedule. “The world is our oyster, the UK is our home, and we’ve got to work with both,” he said. — CNBC’s Steve Sedgwick and Ritika Gupta contributed reporting.
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