{
  "id": 6739422,
  "title": "Why are we giving a £24bn-a-year subsidy to profitable commercial banks? | Letter",
  "url": "https://urgent.news/2026/09/10/why-are-we-giving-a-24bn-a-year-subsidy-to-profitable-commercial",
  "topic": "business",
  "section": "Business",
  "published": "2026-09-10T16:13:20.000Z",
  "source": {
    "name": "Guardian Business",
    "slug": "guardian-business",
    "url": "https://www.theguardian.com/business/2026/sep/10/why-are-we-giving-a-24bn-a-year-subsidy-to-profitable-commercial-banks"
  },
  "original_language": "en",
  "account": "Gerald Holtham proposes reducing the 3.75% interest rate the Bank of England pays on commercial banks' reserves. Calls for a windfall tax on banks are growing, but such a tax is unnecessary; stopping the existing subsidy would suffice. The Bank holds commercial banks' reserve deposits and pays policy interest on all of them, costing taxpayers £24bn annually. This payment exists to control banks' lending rates by setting a floor, but it could be done more efficiently by paying interest on only a portion of the reserves. The Bank could provide a tranche for each bank, with any reserve reduction counted against this tranche first. This approach maintains the same marginal cost for banks while ensuring interest-rate policy effectiveness. Implementing a 20% tranche could save over £19bn annually.",
  "summary": "Gerald Holtham suggests that it time to cut the 3.75% that the Bank of England pays out on the lenders’ reserves There are increasing calls for a windfall tax on banks ( Taxing the banks: what Europe’s windfall levies brought in as Burnham eyes his next move, 2 September ). Such a tax is unnecessary; it would be enough simply to stop paying commercial banks a huge existing subsidy. The Bank of…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}