–Levy Is ‘Fair’ In View Bank System Risks And Will Be Permanent
–Estimates In Line With Those Made In June Budget
–2011 Rate Set At 0.05%, 2012 At 0.075%
–UKT’s Hoban Says Levy Will Make Banks Seek More Stable Funding
LONDON (MNI) – The UK Treasury today set the final rates at which
the Bank Levy – which was announced in the June Budget – will be set
following a period of consultation.
Following two periods of consultation since June, the final
legislation contains changes to the rate of the levy. The rate for 2011
will be 0.05%, rather than 0.04%, and it will rise to 0.075%
from 2012, instead of the 0.07% announced in June.
These changes, along with the introduction of an allowance, rather
than a threshold, for those liabilities to which the levy applies, will
generate around stg2.5 billion of annual revenues. This is in line with
the Budget estimates.
“The levy is intended to encourage banks to move to less risky
funding profiles, and the stg2.5 billion is a fair contribution in
respect of the risks the banking system poses to the wider economy,
while ensuring that the industry remains competitive”.
The Treasury said that the levy would take effect from 1 January
2011 and will be permanent.
Treasury Minister Mark Hoban said:
“We have consulted on the design of the scheme so that it achieves
two objectives: first, ensuring that banks make a fair contribution in
respect of the potential risks they pose to the UK financial system and
wider economy. Second, 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 programme.”
–London Bureau; Tel: +442078627492; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,MGB$$$,MFB$$$]