Web Trader MT5
A targeted tax on banks, usually charged as a small percentage of certain liabilities on the balance sheet. Most countries that adopted bank levies did so after 2008, with two stated goals: claw back some of the bailout cost from the sector that created it, and discourage banks from funding themselves with risky short-term wholesale debt rather than stable retail deposits.
The design varies. The UK levy, introduced in 2011, hit large banks’ global balance sheets at first, with insured deposits and long-term debt excluded to nudge banks toward safer funding mixes. France, Germany, and several others adopted similar regimes with their own quirks.
The economic-incidence question (who actually pays) is unsettled. Banks argue the cost gets passed to customers and shareholders. Treasuries argue the rates are set low enough that banks absorb it. Both are partly right.
Example: HSBC and Standard Chartered both threatened to relocate their headquarters out of London during the early years of the UK bank levy, because the global-balance-sheet design hit them hardest. The UK government eventually narrowed the levy to UK operations and added a separate surcharge on profits, defusing the relocation threat.
