Italy backs off on surprise bank tax cap after stocks tumble

Rome cites 'financial stability' as it seeks to calm the market after the surprise measures.

Shares in Italian banks regained ground on Wednesday as the government tried to deal with market turmoil, pulling back in part on a surprise 40% tax imposed on the banking sector.

The Finance Ministry said in a statement that the tax on net interest income would be limited to 0.1 percent of assets, without specifying exactly what measure would be used. Analysts at Jefferies said the cap would halve the expected impact of the tax.

Intesa Sanpaolo and UniCredit, the country's two biggest banks, opened up more than 2 percent in early trading on Wednesday.

The Ministry of Finance said that the limit was "aimed at preserving the financial stability of lenders".

A banking source in Milan said the cap would make the tax "much more manageable" and raise about 1.8 billion euros, in contrast to previous estimates of more than 4.5 billion euros calculated by analysts at Jefferies and Equita.

An initial draft setting out the details of the tax had said the tax would be capped at 25 percent of banks' net assets, but a later official version did not mention any limit, adding to the uncertainty.

Markets had reacted in shock, sending shares of the big Italian lender down between 5.9 and 10.8 percent by the time trading ended on Tuesday.

The Finance Ministry added that banks that had already adjusted their deposit rates, "as recommended in a note from the Bank of Italy in February", would not see any significant impact from the proposed tax.

A bank executive in Milan said that "ping-pong was shocking", but added that it signaled that the government had undertaken a negative reaction.

The tax, approved at a cabinet meeting late Monday, still needs to secure parliamentary approval. If it continues, it will apply to net interest income generated by the spread between bank lending and deposit rates.

Masa në dukje e nxituar, pasoi presionin politik ndaj koalicionit të djathtë të kryeministres Giorgia Meloni, për të bërë më shumë për të ndihmuar familjet e goditura nga rritja e normave dhe inflacioni.

Administrata e saj, kishte kritikuar më parë bankat, që nuk arritën të kalonin rritjen e normave të interesit te kursimtarët e vegjël.

Lëvizja fitoi një mbështetje të opozitës të martën: udhëheqësi i lëvizjes populiste Cinque Stelle, Giuseppe Conte, tha në mediat sociale: “Më mirë vonë se kurrë”. Ligjvënësit nga Partia Demokratike e qendrës së majtë, gjithashtu duartrokitën masën.

Qeveria tha të martën, se pragu për vendosjen e taksës prej 40 për qind, do të bazohej në diferencën midis të ardhurave neto nga interesi në 2021 dhe shifrës për 2022 ose 2023, cilado qoftë më e madhe.

Banks would pay the tax once their net interest income for the selected year exceeded 2021 by 5 or 10 percent. / The Financial Times