This paper analyzes multinational banks’ response to taxation. For the empirical analysis we use firm-level bank data from the Bankscope database. We find significant tax effects on reported profits of bank subsidiaries. The magnitude for the tax response of reported profits doubles the effects found in previous studies for non-financial MNEs. The response to tax incentives is significantly smaller in the aftermath of the financial crisis in 2008. Additional analysis reveals that in particular trading gains are highly tax responsive. Results also reveal significant tax effects on loan loss provisions and debt financing.