Smaller banks would be exempt, said Osborne, and the rule change is expected to produce £2bn in revenue a year after its introduction in January 2011. Individual bank levies will be calculated on tier one capital calculations, among other factors, and international banks with UK branches will also have to pay the tax.
“This was a crisis that started in the banking sector. The failure of those banks has placed a huge loss on the rest of society,” Osborne said.
The BBA said: “The banking industry fully understands the part which it must play in helping the UK’s economic recovery. We know this is a difficult Budget for everyone, and the banking industry will work to meet its obligations in helping bring the economy back to strength.”
It cautioned: “Bank levies need to be co-ordinated internationally; they must not prevent the industry in the UK from being able to compete.”
The Building Societies Association (BSA) said the calculations do not make sense in the mutual sector. Jeremy Palmer, head of financial policy at the BSA said: “We welcome the Treasury’s clear appreciation of, and support for, the mutual sector. However, some challenges remain.”
The BSA is calling for more discussion to align the levy and the EU Directive at a European level.
