The Swedish centre-left government has long sought to hike taxes on banks and has had several prior attempts rejected. It proposed the new tax, which taxes banks based the amount of debt they hold, in September, saying it would increase tax revenues by 5 billion Swedish crowns ($595 million) in 2022.

"It is clear that the tax would have negative effects on growth, jobs and financial stability," said Hans Lindberg, chief executive at the Swedish Bankers' Association. "In addition, the tax is significantly selective and distorts competition in such a way that it infringes EU state aid rules."

Sweden's top three banks are Swedbank, SEB, Handelsbanken but the tax also applies to foreign banks' operations in Sweden and would also affect Finland's Nordea and Denmark's Danske.

($1 = 8.4070 Swedish crowns)

(Reporting by Johan Ahlander; editing by Niklas Pollard)