The government will raise its bank levy to a rate of 0.088 percent from January 1, Chancellor George Osborne said on Tuesday, as the coalition government seeks to maintain revenue from its tax on balance sheets.

The levy is currently charged at 0.075 percent on bank debts, with a lower rate charged for longer term debt and an exemption for ordinary customer deposits.

The government aims to collect 2.5 billion pounds a year from the levy but banks have been shrinking their balance sheets to comply with tighter capital adequacy rules introduced after the credit crunch.

(Reporting by Matt Falloon, editing by Mike Peacock)