A survey of transfer pricing practices in UK banks and building societies

Very little attention has been paid to transfer pricing issues in the financial services sector Europe‐wide. This article reports on transfer pricing choices of UK deposit‐taking institutions. It is based on the results of an exploratory survey carried out on UK‐based banks and building societies. The main aim is to investigate their transfer pricing methods and objectives as well as the structure and line of responsibility for their transfer pricing decisions. The results of the survey reveal that the achievement of overall corporate goals is the highest ranked transfer pricing objective. Market pricing is the most widely used method among the institutions. Salient differences were however found between the transfer pricing choices of banks, on the one hand, and building societies, on the other.