Giorgia Meloni at the Chigi Palace, seat of government, in Rome, October 23, 2023 (AFP/Alberto PIZZOLI)
One after the other, the Italian banks are running away. Instead of paying the 40% tax on their “surplus profits” introduced by the Meloni government, they prefer to set aside billions of euros to strengthen their reserves, an option authorized by law.
Number one in the sector, Intesa Sanpaolo announced on Wednesday that it wanted to increase its reserves by 2.07 billion euros instead of paying 828 million euros to the tax authorities. On Thursday, the investment bank Mediobanca opted for the same scenario, building up reserves of 226 million euros.
The two banks followed in the footsteps of their rival UniCredit, which had indicated on Tuesday to increase its reserves by 1.1 billion euros to avoid paying a tax which would have cost it 440 million euros.
After facing vehement criticism, including from within her own coalition, Prime Minister Giorgia Meloni was forced to water down her controversial tax plan.
Criticizing the “unfair margins of the banks”, she nevertheless defended her tax to the end, from which she expected revenues of three billion euros. But in the 2024 draft budget, no line is provided for this purpose.
And for good reason: banks can in fact choose between paying the levy or increasing their non-distributable reserves – reserves which cannot be paid out in the form of dividends – by an amount equivalent to two and a half times the tax.
If banks used this type of reserves to redistribute profits to shareholders, they would be exposed to a penalty.
– Pamper shareholders –
UniCredit has already reassured its shareholders, confirming that “more than 6.5 billion euros” would be redistributed in 2023. The bank expects a net profit of “at least” 7.25 billion euros. euros this year.
Intesa Sanpaolo plans to pay 5.8 billion euros to its shareholders and forecasts a profit “well above” 7 billion euros.
His boss Carlo Messina had been the only Italian banker not to reject the idea of a possible bank tax, provided that its revenues were allocated to “measures in favor of people in greatest difficulty”.
To mark the occasion, he announced that his bank intended to allocate 1.5 billion euros over the period 2023-2027 to initiatives aimed at “fighting social inequalities”.
And too bad for the Italian tax authorities. Francesco Galietti, founder of the consulting firm Policy Sonar, judges it “very likely that the additional revenue generated by the bank tax will be non-existent”.
“Some members of the government openly admit that the very idea of this tax was ill-conceived, because it ended up damaging Italy’s credibility,” he told AFP.
– “Demagogic measure” –
The blow was delivered by Marina Berlusconi, who denounced in September a “demagogic” measure risking “making the country less attractive for foreign investors”.
The eldest daughter of Silvio Berlusconi, founder of the conservative Forza Italia party who died in June, is the president of the family holding company Fininvest which controls a myriad of companies, including a 30% share in the Mediolanum bank.
Italian banks have seen their income generated by interest soar in the wake of the rate rise, without increasing the remuneration of their clients’ current accounts.
Hence the idea of the Meloni government to tax the “excess profits” generated by this windfall. Announced at the beginning of August amid great confusion, this project triggered a panic on the Milan Stock Exchange.
The banks thus saw 9.5 billion euros of capitalization go up in smoke in a single session, before the government corrected the situation and amended its decree twice in 24 hours.
“It is a government which tests the reactions of the markets, and if the reaction is too strong, it backpedals,” Gilles Moëc, chief economist of the Axa group, explained to AFP.
According to him, “it’s rather positive, the worst would be to persist like the former British Prime Minister Liz Truss who persisted in wanting to lower taxes and had to resign.”
© 2023 AFP
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