Westpac has worked out how much the bank levy will cost shareholders

Westpac has worked out how much the bank levy will cost shareholders

Westpac Banking Corp (ASX:WBC) says the new major bank tax announced in the Federal Budget, would cost the group around $370 million or around $260 million after tax, on an annualised basis.

Westpac expects to take a $260 million annual cost hit as a result of the government's bank levy, the lender told investors on Monday. No company can simply "absorb' a new tax, so consideration is being given to how we will manage this significant impost on the bank". To dimension the impact of the Levy for our shareholders, the $260 million after tax cost is equivalent to around 8 cents per share (using the above estimates).

"It places the major banks at a competitive disadvantage relative to global peers and it is a tax on growth because as lending and investment increases the cost of the levy also rises", Westpac says.

However, Westpac hasn't yet worked out how to apportion the costs between shareholders and customers, or whether it will cut staff costs or a combination of all three.

However, the big four - ANZ, Commonwealth Bank and National Australia and Westpac - were not included in this mass downgrade on S&P's assumption that the government would support them if necessary.

Mr Maxsted stressed no decision had been made on what Westpac would do with the levy. "Based on Westpac's 2016 full year dividends of 188 cents per share, this represents 4.3% of dividends paid".

He said that still held and no foreign bank operating in Australia "is a major bank in Australia".

Perry pots victor , Ducks level National Hockey League playoff series 2-2
It was apparent the Ducks came to play Game 4 nearly before country star Kelly Clarkson finished the National Anthem. You saw last game the Ducks came out very physical and guys like Harry Zolnierczyk got tossed around and banged up.

Prime Minister Malcolm Turnbull said he was confident the new tax, which is created to raise $6.2 billion, would raise that amount.

In question time, the Turnbull government confirmed the bank levy would be a tax-deductible expense for the big five banks affected by it, and that the estimated $6.2 billion revenue to be raised was a net figure.

It lowered the long-term issuer credit ratings on 23 financial institutions by one notch each, including AMP, the Bank of Queensland and Bendigo & Adelaide Bank.

The Prime Minister said the levy would apply to foreign banks if they reached the $100 billion liability threshold, but "one of the foreign banks' Australian subsidiaries come to that level". You know, I know and the government knows that a tax can not be "absorbed".

Finance Minister Mathias Cormann earlier rejected calls to extend the levy to include foreign banks.

The bank says the exact cost depends on the final form of the legislation passed and the composition of Westpac's liability.

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