While Lloyds, RBS and Northern Rock have all signed, the only bank without substantial state ownership to do so is Standard Chartered. Others like HSBC, Santander and Barclays have kept all their t’s non-crossed and their i’s conspicuously undotted. According to the Guardian (for whom this issue is a particular hobby horse) Barclays apparently believes it already complies, and HSBC is minded to sign up - although the fact it hasn’t yet done so in 16 months suggests a pen that’s hardly racing to that dotted line.
The code is designed to instil a sense among banks of the wider repercussions of how they act – or advise their clients to act – around tax avoidance; it recommends that banks adhere to the spirit rather than just the letter of the law when advising on such schemes. And the stakes are high: according to a tax expert commissioned by the TUC, the banks could avoid as much as £19bn in tax over the next few years by offsetting their recent losses against future profits.
Since the Exchequer needs every penny it can get at the moment, Osborne is on the warpath, promising to make the banks comply by November. The timing of this is surely significant: banks are already public enemy number one, and when the axe starts falling after Wednesday, their tax shenanigans (not to mention their fat bonuses) will be even less palatable to the wider public. So it's going to be tricky for them to say no, regardless of what they really think of the plan. And even if we're not sure what the Chancellor can actually do if they opt to play hardball.
We're already seeing some signs of the banks moderating their approach: Barclays chief John Varley has been telling the FT how sensible the new Basel III rules are, while even Goldman Sachs is reportedly planning to turn over a new leaf in the way it reports and relates to the outside world. With bonus season looming, they need to start building bridges fast. This might be one way of doing it - even though the cost to the bottom line in the short term may be painful.