Chancellor convenes bank CEO summit over valuation concerns

The chancellor has called in the bosses of Britain’s biggest banks for talks next week amid concerns in Whitehall that their share price weakness is inhibiting lending to the wider economy.

Sky News has learnt that senior executives from Barclays, HSBC, Lloyds Banking Group, NatWest Group and Santander UK have been asked to attend a meeting with Jeremy Hunt next Tuesday.

The London Stock Exchange is also expected to be represented at the meeting, according to one insider.

City sources said that Franck Petitgas, the former Morgan Stanley executive who is now Rishi Sunak‘s chief business adviser, had orchestrated the meeting.

The talks will come just weeks before the major UK banks report their annual results for 2023, with earnings growth expected to have been hit by a number of emerging headwinds.

One executive said the meeting had been convened with the premise of discussing steps the government could take in the coming months to stimulate confidence in banks so that they could in turn boost lending into the economy.

In the rankings of the world’s 50 largest banks by market capitalisation, only one UK-headquartered institution – HSBC Holdings – now features.

That compares to a decade ago, when Barclays and Lloyds would also have appeared on that list.

The relative decline in UK bank valuations has taken place despite the fact that many of their balance sheets remain larger than the majority of their peers in countries such as Australia and Canada.

During the last 12 months, NatWest’s shares have slumped by 30%, although the scale of their fall has been partly caused by the turmoil over the debanking row with former UKIP leader Nigel Farage.

Over the same period, however, Barclays shares have fallen by 22% and Lloyds’ stock is down by more than 13%.

Only London-listed shares in HSBC, which is a far more international bank than its peers, are in positive territory over the last year – and even they have gained just 0.25% in that time.

Mr Petitgas is said to have been making the argument to both Rishi Sunak and Mr Hunt that the stock market weakness of UK banks is holding back wider growth, and that this needs to be addressed in order to unleash more lending to businesses and households.

News of the talks between Mr Hunt and the UK bank chiefs has emerged in a week when both the chancellor and his Labour shadow, Rachel Reeves, have been pitching to businesses at the World Economic Forum in Davos, Switzerland.

Labour has commissioned a review of financial services policy involving senior City figures which is expected to be published in the coming weeks.

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A spokesman for the Treasury said on Thursday: “The UK’s banking and financial services sector is world-leading – we’re the largest net exporter of financial services and continue to lead the way in areas such as legal services, finance, insurance, and private equity with the largest markets in Europe.

“We continue to engage with the sector to find new and better ways to unlock growth across the whole of the UK.

“Already our Mansion House and Edinburgh reforms are encouraging growth in the UK’s capital markets, streamlining the listings process, cementing the UK’s status as a leading global capital markets destination and unlocking £75bn in equity funding to help businesses scale up.

“And with the introduction of permanent full expensing, the biggest business tax cut in modern British history worth over £50bn over the next five years, companies can now invest for less in the UK.”

None of the banks contacted by Sky News would comment on next week’s meeting.