Lloyds shares topped the leader board yesterday following an announcement by credit rating agency Fitch that the banks will be able to manage the Government's new bank tax.
In his first Emergency Budget, the new Chancellor George Osborne said yesterday that from January 2011, banks will have to fork out £2billion to help rebuild the UK economy, sparking fear in investors.
But Fitch ratings agency reassured investors yesterday, saying that it anticipates the new bank tax to be "manageable" and that it would not have any impact on global bank ratings.
Lloyds shares climbed 2.34p yesterday, or 4.13%, to 58.02p on the back of the fact that the ratings news was less negative than expected, boosting investor confidence, City Wire has reported. They were up 2.75 per cent this morning.
The Chancellor's decision to implement an extra tax on the banks is a gesture to show that they are sharing the pain brought on consumers by the Budget, including a rise in National Insurance and an increase in VAT to 20 per cent, in addition to rising unemployment and frozen salaries.
"The sums payable under the levy look manageable in the light of banks' pre-tax profits and should not lead to rating changes," said Matthew Taylor, senior director in Fitch's Financial Institutions rating team. "They represent at most a small percentage (0.07%) of a portion of a bank's relevant aggregate liabilities."
He added: "The levy will cost most for the banks with large short-term wholesale funding requirements, and thus will reward banks which have large bases of retail customer funding, which tend also to be more active in retail lending."
The UK Government released a joint statement with France and Germany to announce that they have also revealed their own version of a banking tax.
Mr Osborne said: "In a joint statement, our three governments have pledged to ensure our banks make a fair contribution to reflect the risks they pose."
© Fair Investment Company Ltd