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* Change would see banks placed into different bands
* Government to consult on changes this month
* Critics say levy puts London at a disadvantage
* Levy rate has been raised seven times since 2011
By Matt Scuffham
LONDON, March 19 (Reuters) - Britain is considering changesto its three-year-old bank levy after failing to raise as muchas expected from the tax, which some banks have said unfairlypenalises lenders with big overseas operations and those thatare not selling assets.
In his annual budget statement on Wednesday, ChancellorGeorge Osborne said that the government would consult onpossible changes to the levy which would see banks put intodifferent bands with each band charged a set amount.
The tax has never raised the 2.5 billion pounds ($4.1billion) a year which the government targeted when it wasintroduced in 2011, despite the rate being increased seventimes, because banks' downsizing has meant less profit to tax.
Osborne said in December he would raise the levy rateimposed on banks' assets this year to 0.156 percent from 0.142percent previously and widen its scope to address the shortfall.
The government said on Wednesday that, under the proposedchanges, the amount expected to be raised this year would notchange. The amount would rise in coming years, it said.
Britain is expected to raise 2.3 billion pounds from thelevy this year, according to government data, compared with 1.6billion in each of the two previous years.
The Office for Budget Responsibility reiterated on Wednesdayits target to raise 2.7 billion pounds in 2014/15 and 2.9billion in each of the four subsequent years.
HSBC, Europe's biggest bank, has been hardest hitby the levy, paying out $904 million last year, up $321 millionon the year before. HSBC said more than half its payment lastyear was on non-UK banking activity.
The Treasury will publish a consultation document on theissue on March 27 and any changes to the levy will not beimplemented before next year.
The levy applies to the global balance sheets of UK bankssuch as HSBC, Barclays, state-backed Lloyds BankingGroup and Royal Bank of Scotland as well asassets of UK operations of foreign banks.
Standard Chartered, which makes more than 90 percent of itsprofits in Asia, Africa and other emerging markets, paid $266million last year, up from $174 million in 2012.
Barclays paid 504 million, up 46 percent on last year, whileUK-focused Lloyds and Royal Bank of Scotland saw moremodest increases to their payments.
Overseas banks with big London operations, such as JPMorgan and Goldman Sachs, also pay sizeable sums.
Critics say the levy is damaging London's standing as afinancial centre.
"The UK is the only country hosting a leading financialcentre which has a bank levy. A global consensus on bank leviesseems further away than ever, putting London at a disadvantagewhen competing for global banking business," Peter Maybrey,banking tax partner at PricewaterhouseCoopers, said. ($1 = 0.6034 British pounds) (Editing by Louise Ireland)
