JPMorgan CEO protests UK bonus tax

By Elizabeth Hester
Bloomberg News / December 29, 2009

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NEW YORK - JPMorgan Chase & Co.’s chief executive, Jamie Dimon, told UK Chancellor of the Exchequer Alistair Darling that his 50 percent tax on banker bonuses would unfairly penalize the US lender, a person close to the firm said.

Dimon mentioned plans to build a $2.4 billion European headquarters in London’s Canary Wharf as an example of the New York-based firm’s commitment to the city, the person said. Dimon reiterated that the bank, the second-biggest US lender by assets and deposits, paid British taxes and did not take a UK taxpayer bailout, the person said, declining to be identified because the conversation was private.

The telephone call was made after Darling on Dec. 9 imposed a 50 percent tax on discretionary bonuses greater than $40,000 at all banks operating in the United Kingdom. The tax, which the Treasury says will raise more than $880 million, covers about 20,000 people in the United Kingdom.

The Dimon phone conversation with Darling was reported earlier yesterday by the London Telegraph. A JPMorgan spokesman declined to comment. A UK Treasury spokesman yesterday defended the tax as fair because it would be applied to all banks and said he couldn’t confirm whether the conversation took place.

The UK Treasury is working with banks to identify employees who are excluded from the tax, and Darling said Dec. 16 that he will resist calls to change the policy. He suggested banks’ complex operations won’t allow them to escape the levy by arguing that some activities aren’t banking.

JPMorgan paid $379 million in November 2008 to acquire land in London’s Canary Wharf financial district to build a 1.9-million-square foot tower.

Under the agreement with Canary Wharf’s owners, who will build the offices, JPMorgan can scale back the size of the project. The planned headquarters will house JPMorgan employees from seven other buildings after the bank scrapped plans to build its new head office in London’s main financial district.