The titles of Italian banks, in sharp fall on Tuesday, resumed colors Wednesday morning on the Milan Stock Exchange, after the decision of the government of Giorgia Meloni to put a ceiling on the tax on their “surplus profits”.
In order to preserve the stability of banking institutions, the decree provides for a ceiling for the contribution, which cannot exceed 0.1% of the total assets of a bank, the Minister of the Economy announced on Tuesday evening, anxious to calm the stock market storm.
The surprise decision of the right-wing and far-right government coalition to levy a 40% tax on the excess profits of banks generated by the rise in interest rates had caused Tuesday the tumble of securities of the financial sector on the stock market.
Stock market storm
Intesa Sanpaolo and Unicredit thus lost 8.6% and 5.9% respectively at the close. Monte dei Paschi di Siena fell by 10.8%, Bper Banca by 10.9% and Banco Bpm by 9%.
On Wednesday morning, Intesa Sanpaolo gained 2.3% and its competitor Unicredit rose 4% around 10:30 a.m. (08:30 GMT), like other securities in the banking sector.
We have been saying for months that the European Central Bank is wrong to raise interest rates, and this tax is the inevitable consequence, Deputy Prime Minister Antonio Tajani said on Tuesday.
Italian banks have seen their income generated by interest soar in the crowd of rising rates, without increasing the remuneration of current accounts of their customers in the same proportions.
Tax revenue will be lower
Banks that have already adjusted their rates by reducing the gap between borrowing rates and interest on current accounts will not be significantly affected by the tax, the economy minister promised on Tuesday evening.
After the intervention of the minister, economists have significantly revised their estimates of revenue from the tax.
Capping the contribution to 0.1% of assets considerably reduces the impact of the tax, commented Wednesday analysts at Jefferies who now estimate the total cost for banks at 2.5 billion euros against 4.9 billion previously.
The tax on the excess profits of banks, which must be settled by June 2024, will concern the accounting years of 2022 or 2023.
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