VIENNA, April 1 Austria will keep a levy on banks' balance sheets that raises around 640 million euros ($882 million) a year despite a parallel programme to set up a wind-down fund for ailing euro zone banks, Chancellor Werner Faymann said on Tuesday.
His hard line will be a blow to lenders such as Erste Group , Raiffeisen Bank International and UniCredit Bank Austria, which are not keen to pay levies to both Austria and the euro zone fund.
The Austrian bank tax - set up in 2011 to help recoup funds the state used to bail out lenders during the financial crisis - remains a crucial part of Vienna's efforts to prevent taxpayers from shouldering the entire burden for the sector, Faymann said.
Asked at a news conference whether Austrian banks would have to pay into both schemes, the Social Democrat said this depended on how much the euro zone levy would cost and when contributions would start.
But he added: "This (euro zone) insolvency fund is for the future. The issue of the (Austrian) bank levy is for the past and present, a contribution of the sector that has profited from this (aid)."
He noted the bank levy contributed more than 3 billion euros during each five-year legislative period, money the state can use to help lenders such as nationalised Hypo Alpe Adria , now to be wound down via a "bad bank".
Proceeds from the bank levy flow into general state coffers, to the chagrin of bankers who would like to see the money earmarked for bank-sector support funds.
European Union policymakers agreed last month on how to set up an agency that would wind down collapsing banks and how to provide it with money to cover the costs of the closure.
The money will come from a fund filled by banks' annual contributions which is to reach 55 billion euros after eight years.
($1 = 0.7256 Euros) (Reporting by Michael Shields; Editing by Mark Potter)