UK bank shares fell on Friday after the Institute for Public Policy Research said the UK Treasury should introduce a windfall tax on bank profits to recoup taxpayer losses from the Bank of England's quantitative easing program.

The London-based think tank called on the Treasury to implement a "QE reserves income levy" on commercial banks, which it said could raise up to 8 billion pounds ($10.8 billion) a year for public services.

The institute also urged the BoE to halt its fire sale of government bonds to save over 12 billion pounds annually.

The BoE's program is costing UK taxpayers 22 billion pounds a year to compensate for the losses caused by a "flawed policy design," the institute said.

Shares of Barclays (BCS), NatWest (NWG), Lloyds Banking (LYG) and HSBC (HSBC) were down 2.7%, 4.9%, 3.7% and 0.7%, respectively, in recent US trading.

Price: 19.48, Change: -0.56, Percent Change: -2.77