Spending Review: New levy on banks to raise £2.5bn

A new bank levy will raise about £2.5bn a year from 2012, according to draft legislation published by the government.

The levy will apply to the global balance sheets of UK banks and the UK operations of overseas banks, the Treasury said.

The legislation will encourage banks to take fewer funding risks, it added.

But the banking industry says the tax could undermine the attractiveness of the UK as a financial centre.

Robert Peston reports.