Tags: UK | Lifts | Bank | Levy | Rate

UK Lifts Bank Levy Rate, Revenue Seen at $3.9 Billion

Thursday, 09 Dec 2010 07:18 AM

Britain will raise the levy on banks operating in the U.K. to 0.05 percent in 2011 from the 0.04 percent previously announced, the Treasury said on Thursday.

The Bank levy will then rise to 0.075 percent in 2012 from the 0.07 percent proposed earlier this year, according to final legislation.

The levy is expected to generate around 2.5 billion pounds ($3.9 billion) of annual revenues, the Treasury said, confirming an earlier estimate, and will take effect from Jan. 1, 2011.

Britain introduced the tax to encourage banks to move to less risky funding and so they could make a contribution to the potential risks they pose to the financial system and wider economy following the credit crisis.

"The final scheme design will encourage the banks to make greater use of more stable sources of funding, such as long-term debt and equity, working with the grain of our wider reform program," said Treasury minister Mark Hoban in a statement.

The levy will affect between 30 and 40 banks, building societies and banking groups.

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