gamesindustryblog.com
gamesindustryblog.com June 29, 2017


Westpac has worked out how much the bank levy will cost shareholders

22 May 2017, 04:02 | Ignacio Smith

Westpac Banking Corporation: Impact of new major bank tax on Westpac [price sensitive]

Westpac says bank levy will cost it $260ma year

Australia's four biggest lenders on Monday launched a strongly worded attack on the government's new levy on big banks, estimating almost A$1 billion (US$745.00 million) in additional annual costs between them.

Based on Westpac Banking Corporation's balance sheet at 31 March 2017, the announced 0.06 per cent (or 6 basis point) Levy would apply to approximately $615 billion of Westpac's liabilities ('Impacted liabilities').

Senator Cormann insists there are no major foreign banks in Australia following calls from crossbench senator Nick Xenophon to include them in the policy.

In question time, the Turnbull government confirmed the bank levy would be a tax-deductible expense for the big five banks affected by it, and that the estimated $6.2 billion revenue to be raised was a net figure.

Westpac warned the levy would cost the bank $260m after tax a year, saying there was no way it could simply "absorb" the costs and they would have to flow to customers, shareholders, staff, suppliers or "some combination of all four".

In a letter to shareholders NAB chairman Ken Henry said the bank would continue to fight the tax.

The government can secure the passage of the bank tax legislation with the nine Greens plus one other of the Senate crossbenchers.

Sean Spicer defends White House following Sally Yates' testimony on Michael Flynn
Spicer painstakingly went through the timeline between Yates voicing her concerns and Flynn being asked to resign. Michael Flynn had the shortest tenure as White House National Security Adviser of anyone to ever hold that post.

He said that still held and no foreign bank operating in Australia "is a major bank in Australia". Last week, Assistant Treasurer Michael Sukkar did not rule out including foreign banks and Queensland MP Andrew Laming says they should be taxed as well.

In effect then ever since the GFC Australia's banks have been able to borrow at better rates thanks to the government's liquidity backstop, while also lending out more than $1 trillion at super profitable returns with bad debts at record lows.

Westpac has strongly objected to the Levy on the grounds that it is an inefficient tax that targets just five companies; it places the major Banks at a competitive disadvantage relative to worldwide peers; and it is a tax on growth because as lending and investment increases the cost of the Levy also rises.

And that means the tax will strip 8 cents a share, or about 4.3% of dividends, based on Westpac's 2016 full year dividends of 188 cents.

For a full year, the cost will be $370 million or $260 million after tax.

Worldwide rivals would not be subject to the levy, although HSBC is subject to the equivalent United Kingdom scheme.



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