WASHINGTON (Reuters) - Large banks would be required to pay more into the government fund used to cover the cost of seizing failed banks under a proposal issued by US regulators yesterday.

Bank of America, JPMorgan Chase & Co and Citigroup combined would pay about $1 billion more annually in assessments under the new liabilities-based system, according to industry estimates.

The change, mandated by the new financial regulatory reform law enacted in July, was unanimously backed by the board of the Federal Deposit Insurance Corp.

Community banks lobbied for the change, arguing that large banks pose more of a risk to the financial system and should therefore contribute more to the fund.

The Independent Community Bankers Association estimates the proposed change would save banks with less than $10 billion in assets about $4.5 billion over the next three years.