New bank levy
New draft legislation and explanatory notes have been published following the announcement that the Government are to introduce a bank levy from 1 January 2011.
The levy is intended to encourage banks to take on less risky funding profiles as well as to improve regulatory standards and enhance financial stability of the UK banking industry.
The levy will apply to the global balance sheets of UK banks as well as to the UK operations of banks from other countries. The Government is expected to announce its final decision on the bank levy rates later in the year. From 2012-13 the levy is expected to generate around £2½ billion of annual revenues.
The bank levy will apply to:
- The global consolidated balance sheet of UK banking groups and building societies.
- The aggregated UK group and UK subsidiary balance sheets, together with a proportion (determined in accordance with these provisions) of the balance sheets of foreign banks operating in the UK through permanent establishments which are members of foreign banking groups.
- The balance sheets of UK banks and banking sub-groups in non-banking groups.
- The balance sheets of UK banks that are not members of groups.