Will bank profits such as HSBC's not help to reduce our overall deficit?

Discussion in 'Finance, Property, Law' started by headgear, Aug 3, 2010.

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  1. In all the doom and gloom of cuts and hardtimes ahead etc to my knowledge no public figure has yet said what will happen to our deficit when the banks and stock markets become profitable again.

    As a complete biff in this area I am assuming that surely a good deal of the pain will disappear when the likes of HSBC, RBS and Lloyds start turning profits again.

    What I can't understand is why noone at the top (like Vince Cable for example) is explaining what the impact of such positive events would have on our national debt. I'm also concerned that the government will do a Gorgon Broon (gold reserves!) and sell the banks at their lowest price - just before they return to big profits!

    Can anyone out there, perhaps someone from the city with lots more financial knowledge than me expand on the possibility of paying off the debt through financial institution profit, rather than just cuts?
  2. HSBC, did not get bailed out by the goverment, so probably not help to cut our deficit!

  3. A return to profit for the banks is generally a positive... however before we get carried away it should be remembered..

    Although previously the treasury have pulled in huge taxes from bank profits, the gigantic losses incurred in the last few years will mean that little if any of their profits will be taxed for quite a while as a business can carry forward losses to future years and offset them.

    A share price rally in banks looks good on paper, but the govt will have to handle any potential sell off very carefully, as dumping large volumes of stock on the market will reduce prices - for an example McBroon announced selling off gold reserves to the market thus assuring prices fell beforehand.

    There is a long way to go yet before we are out of the brown stuff
  4. Banks like LloydsTSB allegedy returning to profit is great news (even if it is mainly just creative accounting*).

    OTOH, they make their money from you and me. So who do you think is really repaying the deficit? Certainly not the fat cats as they shove two fingers up to the public and pay themselves massive bonuses. All paid for by them introducing stealth charges - even for approved overdrafts (£5 per month I believe).


    * The creative accounting will increase year on year as this 'justifies' their huge bonuses.
  5. oldbaldy

    oldbaldy LE Moderator Good Egg (charities)
    1. Battlefield Tours

    The problem for the government & Cable in particular is the HSBC is a global bank, they have up sticks once, from HK, to UK and have hinted at the UK government that if they do not like the fiscal regime they will up sticks and move again. Already the CEO, Michael Geoghegan, has moved to Honk Kong as that is where they see growth. If the UK goverment pick up a stick & try to beat them with it they will loose billions in tax revenue.
  6. If the banks make more money, then we make more money in tax, so simply put yes.
  7. ... but they less less in tax than they make from us. How is that such a positive thing?

  8. Surely any company pays less tax than they make from us, considering tax is less than 100% of turnover?
  9. HSBC is a private bank and its international bank so obviously it gives so much service and spends a lot so its difficult for a bank also to cut their deficit.