Banks tumble on the Milan Stock Exchange after the announcement of a tax on “excess profits”

2023-08-08 10:49:53

By Le Figaro with AFP

Posted 32 minutes ago, Updated 10 minutes ago

Italy intends to levy a tax on the “surplus profits” of “billions” of euros from the banks for soaring interest rates. GUGLIELMO MANGIAPANE / REUTERS

Italy intends to levy a tax on the “surplus profits” of “billions” of euros from banks, Deputy Prime Minister Matteo Salvini said on Monday evening.

The titles of Italian banks plunged Tuesday morning on the Milan Stock Exchange, after the decision of the government of Giorgia Meloni to levy a tax of 40% on their “surplus profits” generated by the rise in interest rates.

All bank stocks fell. Around 09:40 (07:40 GMT), Intesa Sanpaolo lost 7.7%, Unicredit 6.2%, Monte dei Paschi di Siena (Mps) 7.3%, Bper Banca 7.7%, Banco Bpm 6.7% and Mediobanca 2 .9%, in a market down 1.64%.

Italy intends to levy a tax onsuperprofits” of “billionEuros from banks to offset the cost to households and businesses of soaring interest rates, Deputy Prime Minister Matteo Salvini announced on Monday evening. This increase, which has significantly increased the profits of banks, has harmed their customers who are bearing the brunt of the increase in their borrowing rates, deplored Matteo Salvini after a Council of Ministers.

Read alsoRise in interest rates: Italy taxes the “excess profits” of banks

Several billions taken

«It is not a few handfuls of millions, but a few billions. It’s a fairness measure.“Assured the boss of the League, a far-right party member of the government coalition led by Giorgia Meloni. The tax on the excess profits of banks, which must be settled by June 2024, will concern the accounting years of 2022 and 2023, AFP learned from a government source.

The 40% deduction will be made if the net interest income recorded in 2022 exceeds the value of the 2021 financial year by at least 3%. This tax will be applied to the part exceeding the amount of the previous financial year. For the profits of 2023 compared to 2022, the threshold from which the tax will be levied goes up to 6%.

Italian banks, like their European competitors, saw their net interest income soar in the wake of the rise in interest rates, without increasing the remuneration of their customers’ current accounts.

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