Morning Coffee: Bankers and their bonuses quietly bashed in British budget. JPMorgan's tactics for making important friends

This week's UK budget may not have been as explicitly anti-banking as the 2009 budget with its one-off 50% tax on bonuses above £25k, but as the dust settles on Rachel Reeves' repertoire, it's becoming apparent that people in banking are not her first friends. 

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It's not just the £2.5k+ a year new "mansion tax," which is afflicting people like Nick Miller, a youthful but retired corporate financier from Richmond who's selling the £2m five-bedroom house in East Sheen, where he's lived for 30 years, but Reeves' other measures too. In particular, it's the imposition of new national insurance contributions on pension savings.

The Financial Times says Reeves "poured venom" on financial services workers during the budget speech when she discussed her national insurance move. The transcript is less vitriolic than this might suggest. However, Reeves did say that "higher earners" and "those in the financial services sector putting their bonuses into pensions tax-free" have benefitted from favourable tax treatment of pensions, while "those on the minimum wage or those whose employers don’t offer salary sacrifice don’t."

The FT says the change to national insurance on salary sacrifice schemes is expected to raise £4.8bn in 2029-30 [when it comes into effect], falling to £2.5bn the next year. The cost will fall mainly on employers. The FT also cites figures from accounting firm Blick Rothenberg, which say that someone earning £150k and paying 10% into their pension, will need to pay £260 more from April 2029, while their employer will have to pay an additional £1,950. 

Three years into their careers as bankers, associates in London can earn £180k+. Placing money into a pension has been a fine way of offsetting taxation. Blick Rothenberg says the financial services sector alone is expected to generate £1.2bn a year of the new national insurance payments on UK pension savings. That's 48% of the ongoing total from the new tax.  

It could have been worse. There were fears that Reeves might remove higher rate pension tax relief altogether for high earners. Never say never. Reeves' comments this week reveal that bankers are still in her sights. 

"There are some banks who still believe their priority is to pay substantial bonuses to some already highly paid staff," chided Chancellor Alistair Darling when he introduced the bonus in 2009. Darling's tax raised £3.5bn and has been eyed with interest by Labour MPs ever since.

Separately, JPMorgan is building another big tower. It's doing so in London and is, again, asking Foster + Partners to come up with designs.

Coincidentally, the construction of JPMorgan's new tower was announced yesterday, the day after the UK budget. The Financial Times observes that the timing may not be entirely coincidental: earlier this week, the FT also reported Reeves was asking banks to praise her budget plans in return for her omission of an extra levy on their profits. 

In this context, JPMorgan's sudden "announcement" that it intends a three million square foot building to house 12,000 of its employees in Reeves' domain looks like a pain-free endorsement of her policies. In fact, it's nothing new: Bloomberg reported in September that JPMorgan was drawing up plans for the new building. Yesterday's revelation seems a carefully timed method of making governmental friends.     

Meanwhile...

Goldman Sachs has also announced that it's expanding in the UK. The Birmingham office will go from 500 to 1,000 people. (Insider Media) 

It was a massive error,” and a “huge fuck-up” but the OBR's accidental release of its report on the budget an hour early wasn't because it was published to the OBR's website by an employee working remotely in a different time zone overseas (as suggested on X/Twitter), but because a clever Reuters journalist had the idea of typing in a website address in a format similar to that used in previous years, and found that it worked. (Financial Times) 

A parent with two children at a London nursery whose pay went a pound over the £100k threshold will still need to earn more than £149k to compensate for the value of lost childcare support. (Financial Times) 

Once UK students earn more than £29.4k they have to spend 9% of their income repaying their student loans. The minimum wage is now £24.8k, so soon students will be repaying student loans when they earn £24.8k. (Financial Times) 

Private equity firms love life insurance assets. In the US market, PE-backed insurers now oversee about $900 billion of these liabilities, up from $67 billion in 2012. (Bloomberg) 

The SEC is investigating whether Jefferies gave investors in its Point Bonita fund enough information about its exposure to First Brands. It's also looking into internal controls and potential conflicts within and between different parts of the bank. (Financial Times) 

Citi launched a new $595-a-year card and offered extra sign-up points for customers who applied through a special link provided in-person at its branches. The applicants weren’t screened as strictly as usual because they were likely to be existing customers. The link was posted on Reddit and thousands of bad people applied - and were approved - by mistake. (WSJ)

Propranolol is non-addictive compared to benzodiazepines, such as Xanax or Valium. It is among the “mildest variety of anti-anxiety medication.” But if you take too much, you could faint. (WSJ) 

Thanksgiving memories of Balyasny's top quant. "I used to spend my summers in Sicily in a village of 10 families, walking the hills with chestnut gatherers, who had done this for generations, only speaking strict Sicilian dialect. These were the happiest, most magical summers of my life." (ByFire) 

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