Italian Bank Shares Plunge on Windfall Tax
08 August 2023 - 6:37PM
Dow Jones News
By Adria Calatayud and Cecilia Butini
Shares in Italian banks fell sharply Tuesday, and dragged down
European peers, after the Italian government approved a windfall
tax on their profits limited to 2023.
At 0803 GMT, shares in Intesa Sanpaolo and UniCredit dropped
6.8% and 5.2%, respectively. Smaller banks Banco BPM, BPER Banca
and Banca Monte dei Paschi di Siena all fell more than 6%. Most
European banks traded lower, and the Stoxx Europe 600 Banks index
was down 1.5%.
Italy's cabinet approved a proposal to introduce a tax on banks'
profits that will apply only in 2023, Deputy Prime Minister and
Infrastructure Minister Matteo Salvini said at a press conference
Monday. The tax will amount to 40% of what Salvini called banks'
extra profits and will result in tax income of "a few billion"
euros, he said.
The measure aims to aid mortgage payments and tax cuts, the
Italian deputy prime minister said.
"While the cost of money has increased and even doubled for
families and businesses, what account holders earn hasn't doubled,"
Salvini said.
The move comes after Italian lenders in recent weeks reported
strong quarterly results. Intesa and UniCredit both raised their
expectations for 2023 after second-quarter earnings topped
forecasts.
Analysts at Citi said in a research note that the decision came
as a surprise and is substantially negative for Italian banks. The
tax could hit Italian banks' earnings by around 19% and reduce
their book value by around 3%, Citi analysts estimated.
"Smaller players with higher reliance on [net interest income],
and showing stronger growth are in our view the banks with the
highest impact," the Citi analysts said.
Write to Adria Calatayud at adria.calatayud@dowjones.com and to
Cecilia Butini at cecilia.butini@wsj.com
(END) Dow Jones Newswires
August 08, 2023 04:22 ET (08:22 GMT)
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