Italian banking shares took a beating on Tuesday after Italy's cabinet surprised with a 40% windfall tax on lenders' 'excess' profits in 2023. Deutsche Bank trading 2% lower. Italian Deputy Prime Matteo Salvini told a press conference on Monday that the 40% levy on banks' extra profits derived from higher interest rates, amounting to several billion euros, will be used to cut taxes and offer financial support to mortgage holders.
Italian Deputy Prime Matteo Salvini told a press conference on Monday that the 40% levy on banks' extra profits derived from higher interest rates, amounting to several billion euros, will be used to cut taxes and offer financial support to mortgage holders.
"If [it is true that] the cost of money burden for households and businesses has increased and doubled, it has not equally doubled what is given to current account holders."The one-off tax will be equal to around 19% of banks' net profits for the year, analysts at Citi estimated based on currently available data.
The tax will apply to "excess" net interest income in both 2022 and 2023 resulting from higher interest rates, and will be applied on NII exceeding 3% year-on-year growth in 2022 from 2021 levels, and exceeding 6% year-on-year growth in 2023 versus 2022. Banks are required to pay the tax within six months after the end of the financial year.
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