Italy issued a clarification of its new tax on banks’ windfall profits, saying the impact may be limited for some banks and the levy won’t exceed 0.1% of a firm’s assets.
Banks that have already increased the interest rates they offer to depositors “will not have a significant impact as a consequence of the rule approved yesterday,” the finance ministry said in a statement Tuesday night.
The clarification came about 24 hours after the government shocked markets with the unexpected tax, announced in off-the-cuff remarks by Deputy Prime Minister Matteo Salvini at the end of a news conference on other measures approved by Italy’s cabinet.
The nation’s largest banks, Intesa Sanpaolo SpA and UniCredit SpA, have seen net interest income surge, and analyst estimates for the 2023 haul would mean that the tax would likely hit the cap of 0.1% of assets. The government didn’t specify the measure used for the cap. If it was based on global assets, that would leave the two banks each facing a levy of around $1 billion. If just Italian assets, it would be much lower, though still several hundred million euros.
The 40% levy on the extra profits of lenders sent Italian bank stocks tumbling. The tax targets lenders’ higher interest incomes following rate hikes by the European Central Bank. It will be used for a fund to help reduce financial pressure on families and companies, the government said.
{{/usCountry}}The 40% levy on the extra profits of lenders sent Italian bank stocks tumbling. The tax targets lenders’ higher interest incomes following rate hikes by the European Central Bank. It will be used for a fund to help reduce financial pressure on families and companies, the government said.
{{/usCountry}}The 40% tax will be on the larger of two measures: The difference between net interest income in 2022 and 2021 in excess of a 5% gain, or the difference in net interest income between 2023 and 2021 above a 10% gain, according to the statement.