The government has published proposals over the introduction of a levy on banks’ balance sheets from 1 January 2011.

Once fully in place, the Levy is expected to generate around £2.5 billion of annual revenues.

The coalition says it believes that banks should make a full and fair contribution in respect of the potential risks they pose on the wider economy.

The Financial Secretary to the Treasury, Mark Hoban, said: “The levy has been designed to encourage less risky funding and complements the wider agenda to improve regulatory standards and enhance financial stability. It will apply to the global balance sheets of UK banks