Thursday, December 28, 2017

Say What? Barclays and Shell Warn of Billion-Dollar Hits From Trump Tax Reform

Here's the first indication of how the devil is in the details when it comes to Trump tax reform and how the reform contains a lot of shifting around of taxes rather than real cuts in some cases.

Both Shell and Barclays said that while they were likely to benefit over time from the reduction in the US corporate tax rate from 35 per cent to 21 per cent, they expected to take hefty non-cash charges in their fourth-quarter results, reports The Financial Times.

Shell announced on Wednesday that it expected to take a $2bn-$2.5bn charge against the accounting value of its “deferred tax assets” in response to the tax reform.

Barclays said it expected to record a £1bn charge in its 2017 results that would dent its capital position and could damp shareholders’ hopes that the bank would soon announce a sizeable increase in its full-year dividend.

According to FT, the warning from Barclays came a few days after Credit Suisse said it expected the US tax changes to trigger a SFr2.3bn ($2.3bn) writedown in its fourth-quarter results that would risk dragging the Swiss bank to its third consecutive annual loss. Its Swiss rival UBS has already estimated that it faces a SFr3bn hit from the US tax rewrite.

It is expected that Bank of America, Citigroup and AIG will also have to take multi-billion dollar writedowns.


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