Italian Bank Shares Recover After Government Set Cap on Windfall Tax

   By Giulia Petroni 
 

Shares in Italian banks trade higher on Wednesday after the Italian government set a cap for the proposed windfall tax on lenders' extra profits in a move to reassure markets.

At 0808 GMT, shares in Intesa Sanpaolo and UniCredit are up 2.5% and 3.4%, respectively. Smaller banks Banco BPM and BPER Banca are up 2.9% and 2.7% respectively, while Banca Monte dei Paschi di Siena trades 3.4% higher.

The Ministry of Economy and Finance said in a statement that proceeds from the tax wouldn't amount to more than 0.1% of lenders' total assets in order to safeguard the banking system's stability.

"The news is positive for the banking sector as it more clearly defines the effects of the one-off taxation that, as currently formulated, is expected to have much smaller impacts," said Equita Sim's Andrea Lisi.

The shares recovering comes after the surprise announcement of the new tax sparked a market selloff on Tuesday. The government agreed on a one-off 40% windfall tax on the income made from higher interest rates in 2023 or 2022, whichever is higher. Parliament still needs to pass the legislation to introduce the levy.

Other European countries such as Spain and Hungary have adopted similar taxes and, according to analysts, Italy's move could result in other countries imposing bank taxes or levies to claw back profits.

Write to Giulia Petroni at [e-mail]

(END) Dow Jones Newswires

August 09, 2023 04:48 ET (08:48 GMT)

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