Govt launches consultation into bank levy
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The Government has launched a consultation into the design and implementation of the bank levy.
The Government says the consultation will help to ensure that the levy meets its objectives and that compliance costs faced by firms are minimised.
It expects to publish draft legislation in the autumn and final draft legislation towards the end of 2010.
The Government says the structure of the levy is intended to encourage the banks to move away from riskier funding models, reducing systemic risk.
Once fully established, the levy is expected to generate around £2.5bn per annum.
Chancellor George Osborne, announced the introduction of a Levy in the June Budget.
It will apply to the balance sheets of UK banks and building societies, and to the UK operations of banks from abroad.
France and Germany also announced that they would introduce a levy based on banks’ balance sheets.
Financial secretary to the Treasury Mark Hoban says: ” Excessive risk taking in the banking sector was a significant contributory factor in the recent financial crisis.
“Alongside the wider financial regulatory reform aimed at increasing the resilience of the financial sector, the Levy is intended to ensure that the banking sector makes a fair contribution that reflects the risks it poses to the financial system and the wider economy, and to encourage banks to move away from riskier funding – problems with risky funding led to serious liquidity problems that played a key role in the financial crisis.”
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