After strong fluctuations on the stock exchanges, the Italian government has set an upper limit for the special tax on bank profits that has been decided. The surprising decision for an excess profit tax had led to a slump in the shares of the Italian financial institutions on the financial market yesterday.
The Treasury responded later in the evening to calm markets. It announced that the revenue from the tax would not exceed 0.1 percent of the institute’s total assets.
Stocks are recovering somewhat
Italian bank shares then recovered somewhat from their previous day’s losses. The shares of the industry leader Intesa Sanpaolo gained 3.0 percent in early trading at times, that of the competitor UniCredit 3.3 percent.
Apparently, the market reaction has prompted the government to tone down its plans at least somewhat. As the “Financial Times” reported, the Ministry of Finance should present a solution to at least partially calm the markets.
billion revenue expected
The right-wing government, led by Prime Minister Giorgia Meloni, wants to use the tax to siphon off profits that banks make from rising interest rates. It is estimated that around three billion euros would be collected from the tax, which would be levied once in 2023, according to government circles.
The government had criticized the gap in interest rates for loans and interest rates for savings in favor of the banks. In the course of the series of interest rate hikes by the European Central Bank (ECB), institutes had made loans more expensive, but tended to be cautious about interest on savers’ deposits.
Surprising decision
Other European countries such as Spain and Hungary have already introduced special taxes for banks. But in Italy, according to analysts, the government decision caught the financial market unprepared, which damaged investor confidence.
Italy’s government had previously discussed the idea of such a bank tax, but seemed to want to drop the plans recently. The decision in favor of the tax then came as a surprise, even to ministers who came together for a cabinet meeting on Monday evening.
As a result, Italy’s bank shares fell 7.6 percent on Tuesday, while Intesa Sanpaolo’s stock fell 8.6 percent. Titles of the medium-sized institute BPER even lost 10.9 percent.
