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Barclays to incur one-off £1B charge from new US tax law

Barclays Plc expects to incur a one-off charge of about £1 billion to its 2017 group profit after tax resulting from the new U.S. Tax Cuts and Jobs Act, implemented Dec. 22.

The U.K. lender expects the measurement of its U.S. deferred tax assets to drop by about £1 billion as a result of the law, which reduces the statutory rate of the U.S. federal corporate income tax to 21%. Barclays also expects a net increase of approximately £300 million to its U.S. deferred tax assets, unrelated to the U.S. tax act, due to a revaluation of Barclays Bank Plc's U.S. branch deferred tax assets.

Based on its financial information as of September-end, Barclays also expects a roughly 20-basis-point reduction in its group common equity Tier 1 ratio and a decrease of about 6 pence to its TNAV per share. The bank said it will account for these impacts in its 2017 financial results.

Barclays added that it expects the reduced tax rate to have a positive impact on its future U.S. after-tax earnings. However, the ultimate impact is subject to the effect of other complex provisions in the act, including the Base Erosion and Anti-Abuse Tax, which the lender is currently reviewing.