STATE-OWNED Lloyds Banking Group emerged as the relative winner from an annual £2bn levy on banks’ balance sheets announced yesterday.
The tax will apply to British banks and building societies, such as Barclays and the Skipton, and the UK operations of foreign institutions like JPMorgan and Goldman Sachs.
From January 2011, banks will be charged at a rate of four basis points on their liabilities, apart from core capital, repurchase agreements on sovereign debt and insured retail deposits. The rate will rise to seven basis points from January 2012.
Longer-maturity wholesale funding will be taxed at half the main rate. Because Lloyds is proportionately more reliant on wholesale funding than many of its competitors, it will escape with a lower bill.
Introducing one of the more arbitrary measures of his “unavoidable” Budget, Osborne pointed out the financial crisis began in the banking sector. Banks must “make a more appropriate contribution, which reflects the many risks they generate,” the chancellor said.
Yesterday senior bankers seemed relieved at the mildness of the tax, which is no tougher than Labour’s £2bn raid on bonuses last year. Angela Knight of the British Bankers’ Association accepted all sectors would have to contribute to the rebuilding of Britain’s public finances, but added: “However this is calculated and applied, it mustn’t impact the competitiveness of the UK and the banks operating in the UK.”
A source at a well-known investment bank said: “Like everybody else we want a safe economy and safe markets. Those banks that are a success are just as pissed off as the rest of the world at the banks that failed.”
The Treasury will consult with bankers over the summer before firming up the levy’s technical details. France and Germany are set to bring in similar tolls.
Osborne said he was also in talks with world finance ministers over a separate financial activities tax on banks’ profits and bonus payments, set to be discussed at the G20 summit in Toronto starting 26 June.