Barclays Share News (BARC)

By Dominic Elliott Of FINANCIAL NEWS Measures announced as part of the U.K.'s emergency Budget will provide a fillip to Lloyds Banking Group's (LYG) business by the year 2012 and will hit earnings at the country's other four large universal banks by "just" GBP56 million on average--or less than 1% of profits. The good news comes thanks to a successive one percentage point reduction in the U.K.'s corporate tax rate over the next four years, which will soften the blow of the estimated GBP2 billion bank levy on banks' balance sheets, due to come at the start of next year after consultation this summer. Citigroup bank analysts led by Leigh Goodwin released research this morning that said Lloyds was the clear "winner" from the U.K. Budget and would receive an estimated profit increase of GBP132 million in the year 2012. The research said that the other four major U.K.-listed banks--Barclays (BCS), HSBC (HBC), Royal Bank of Scotland (RBS) and Standard Chartered (STAN.LN)--will all suffer "small" net hits. In Lloyds' case the reduction in corporate tax will actually more than offset the pain by 2012, Citi's research said. Standard Chartered's 2012 profits would be GBP36 million lower than before the Budget, RBS and Barclays would each be GBP52 million worse off, while HSBC would take an GBP83 million hit. The analysts wrote: "The levy is less severe than the market expected, we believe, for Lloyds and RBS. It is less positive for Barclays, since its wholesale funding is relatively short-dated." The bank levy will not apply to longer-dated debt nor to Tier 1 capital, which is typically largely made up of common stock and retained earnings. However, Citi's analysts said HSBC "appears to rather unfairly penalized, in our view, as does Standard Chartered, given that the levy is apparently based on their consolidated group balance sheets." The benefit to the two banks of the lower corporation tax rate only applies to UK profits, Citi said. A spokesman for Standard Chartered said it was looking at the details of the proposals. A spokesman for HSBC declined to comment on the research, but pointed out that the Treasury had said the application of the levy would subject to consultation. Spokespeople for Barclays and Lloyds declined to comment. A spokeswoman for RBS did not immediately respond to requests for comment. Web site: www.efinancialnews.com (END) Dow Jones Newswires June 23, 2010 09:37 ET (13:37 GMT)