Banks, building societies and credit unions will be asked to pay £406m as their initial contribution to the costs of the five bank defaults of 2008.
The Financial Services Compensation Scheme (FSCS) is issuing an initial levy to deposit taking firms for interest charges on the loans it used to fund its compensation payments following the failures of five banks.
These were: Landsbanki Islands hf (Icesave), Bradford and Bingley, Heritable, Kaupthing Singer and Friedlander and London Scottish Bank.
FSCS costs for the defaults were funded through loans from HM Treasury on an interest-only basis for the first three years.
The FSCS will agree a repayment scheme with HM Treasury to use any recoveries received to repay the principal and will start repaying the outstanding principal net of any recoveries in 2012.
Loretta Minghella, FSCS chief executive says, "Today's announcement confirms that this first levy will be £406m, which is in line with our estimate announced in March. Whilst we recognise that the levy comes at a difficult time for firms, it is also clear that the FSCS plays a central role in helping promote consumer confidence in financial services which benefits the whole industry."
The FSA and FSCS are sending invoices to firms due to pay the levy this week. The invoices are due to be paid by 1 September.
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