Lloyds Banking Group PLC (LSE:LLOY), Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG) all ticked higher as a senior civil servant again stated there would be no back door windfall tax on UK banks.
Numerous reports previously have suggested the government was mulling cutting the rate of interest paid to the high street banks on deposits held at the BoE, however, this was denied yesterday.
"There will be no plans to do that," permanent secretary James Bowler said to a meeting of parliament’s Treasury Committee.
Ex-BoE deputy governors Charlie Bean and Paul Tucker have both mooted a review be launched into how interest is charged on £950bn pounds of reserves lodged by the banks.
Andrew Bailey, the Bank’s current governor, has come out publicly against any change saying taxation, if anything, should be used, while chancellor Jeremy Hunt made no mention of any amendment in his recent budget statement.
Commercial banks are paid interest on the reserves at the current base rate, which has soared to 3% currently from just 0.1% a year ago and a change expected to result in a £130bn cost to the Treasury over the next six years.
Lloyds shares rose 2% to 46.7p, Barclays rose 1.7% to 161p and 1.5% to 264.3p.