* Change would see banks placed into different bands
* Government to consult on changes this month
* Critics say levy puts London at a disadvantage
* Levy rate has been raised seven times since 2011
By Matt Scuffham
LONDON, March 19 Britain is considering changes
to its three-year-old bank levy after failing to raise as much
as expected from the tax, which some banks have said unfairly
penalises lenders with big overseas operations and those that
are not selling assets.
In his annual budget statement on Wednesday, Chancellor
George Osborne said that the government would consult on
possible changes to the levy which would see banks put into
different bands with each band charged a set amount.
The tax has never raised the 2.5 billion pounds ($4.1
billion) a year which the government targeted when it was
introduced in 2011, despite the rate being increased seven
times, because banks' downsizing has meant less profit to tax.
Osborne said in December he would raise the levy rate
imposed on banks' assets this year to 0.156 percent from 0.142
percent previously and widen its scope to address the shortfall.
The government said on Wednesday that, under the proposed
changes, the amount expected to be raised this year would not
change. The amount would rise in coming years, it said.
Britain is expected to raise 2.3 billion pounds from the
levy this year, according to government data, compared with 1.6
billion in each of the two previous years.
The Office for Budget Responsibility reiterated on Wednesday
its target to raise 2.7 billion pounds in 2014/15 and 2.9
billion in each of the four subsequent years.
HSBC, Europe's biggest bank, has been hardest hit
by the levy, paying out $904 million last year, up $321 million
on the year before. HSBC said more than half its payment last
year was on non-UK banking activity.
The Treasury will publish a consultation document on the
issue on March 27 and any changes to the levy will not be
implemented before next year.
The levy applies to the global balance sheets of UK banks
such as HSBC, Barclays, state-backed Lloyds Banking
Group and Royal Bank of Scotland as well as
assets of UK operations of foreign banks.
Standard Chartered, which makes more than 90 percent of its
profits in Asia, Africa and other emerging markets, paid $266
million last year, up from $174 million in 2012.
Barclays paid 504 million, up 46 percent on last year, while
UK-focused Lloyds and Royal Bank of Scotland saw more
modest increases to their payments.
Overseas banks with big London operations, such as JPMorgan
and Goldman Sachs, also pay sizeable sums.
Critics say the levy is damaging London's standing as a
"The UK is the only country hosting a leading financial
centre which has a bank levy. A global consensus on bank levies
seems further away than ever, putting London at a disadvantage
when competing for global banking business," Peter Maybrey,
banking tax partner at PricewaterhouseCoopers, said.
($1 = 0.6034 British pounds)
(Editing by Louise Ireland)