Europe plans to scale back transaction tax

European states planning a financial transaction tax are set to drastically scale back the levy, cutting the charge by as much as 90% and delaying its full roll-out for years, in what would be a major victory for banks.

Such sweeping changes would blunt the impact of the tax, pushed for by German chancellor Angela Merkel and popular with voters who blame bankers for the financial crisis.

The revisions have yet to be formally proposed but were revealed to Reuters by officials working on the project.