Pressure builds for levy on banks

By Huw Jones

LONDON (Reuters) - Faced with rising debt and angry taxpayers, governments are edging towards imposing a global tax on banks to make them pay for financial sector bailouts costing hundreds of billions of dollars.

National rivalries, political infighting and lobbying by the banks themselves may still end up blocking any agreement on a global levy. Financial and regulatory officials remain far from a consensus on the size and nature of any tax.

But after months of resistance, the banking industry itself now concedes it needs to discuss the idea of a levy, which could reimburse taxpayers for some of the money spent on bailouts over the past 18 months, and create a fund to pay for future rescues.

"A fund at some point is, I think, inevitable," Charles Dallara, managing director of the Institute of International Finance IIF.L, a global lobbying group for banks, told Reuters.

"We are open to discussing the construct and operation of a global resolution fund. There does need to be some willingness on the part of the private financial community as well as the public sector to have a very constructive dialogue. It's early days."

INTERNATIONAL COMPETITIVENESS

Leaders of the Group of 20 nations, meeting in Pittsburgh in September, asked the International Monetary Fund for a global study of options requiring banks to "make a fair and substantial contribution" towards bailouts.

British Prime Minister Gordon Brown gave the idea of a global levy a fresh boost this month when he called for it be considered "with urgency". That was a shift in Britain's position, bringing it in line with France and Germany, which have been keen on exploring a global tax.