Labour-backing boss of UK lender criticises banks ‘subsidised by taxpayers’

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Andrew Feinberg

White House Correspondent

The boss of a digital lender has said he is “not sympathetic” to banks that are “subsidised by the taxpayer”, as he called for change in the UK ahead of the General Election.

Mark Mullen, the chief executive of Atom bank, was among a list of 120 business leaders to sign a letter backing the Labour party’s economic plans.

He told the PA news agency he was supporting Labour because “the country needs a change” after a Government he said has been dominated by in-fighting and divisions rather than economic prosperity.

Mr Mullen also criticised big banks for being slow to pass on higher interest rates to customers with current and savings accounts.

Atom bank said last week it had “comfortably outperformed the major high street lenders and building societies when it comes to offering savings customers a better deal”.

It reported an interest rate deposit beta of 88% – meaning the proportion of official base rate rises it passed onto its own savings rates.

Mr Mullen told PA: “If you’re running a company that has a deposit beta of 88%, then you are not being subsidised by the Bank of England, because we’re passing on the benefits straight to the customer.

“If, on the other hand, you’re running a bank which is only passing on 30% of the benefits, and reserving 70% for yourself… then frankly, you are being subsidised by the the taxpayer, and I’m not sympathetic to that.”

He said he was “not against changing the current rules” in relation to how the Bank of England pays interest to commercial lenders on their reserves.

Banks are paid interest on the money they hold with the Bank of England. The Bank currently pays 5.25% on these deposits, the same as the official base interest rate.

The Reform UK party earlier this week said it wanted to scrap these interest payments as part of ambitions to save the central bank potentially billions of pounds.

The programme is funded by the Treasury, which is backed by UK taxpayers.

But Mr Mullen stressed that any change of the rules would need to be a “transition” rather than an immediate shift.