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An initial draft text setting out details of the tax, leaked after the measure was approved, said the levy would be capped at 25 per cent of banks’ net assets, but a later official version on Tuesday afternoon failed to mention any cap, adding to the confusion.
Markets reacted with shock, sending shares in major Italian lenders down by between 5.9 per cent and 10.8 per cent by the end of trade on Tuesday. The finance ministry later said that banks that had already adjusted their deposit “as recommended in a note by the Bank of Italy in February” would not experience any meaningful effect from the proposed tax.
A banking executive in Milan said “the ping-pong was shocking” but it signalled that the government had taken the negative reaction on board.
The tax, approved in a cabinet meeting late on Monday (Tuesday AEST), still needs to secure parliamentary approval. If it proceeds, it will be applied to the net interest income generated from the gap between banks’ lending and deposit rates.
The apparently hasty measure followed political pressure on Prime Minister Giorgia Meloni’s right-wing coalition to do more to help households hit by rising rates and inflation. Her administration had previously criticised banks that failed to pass on interest rate rises to small savers.
The move won some opposition support on Tuesday. The leader of the populist Five Star Movement, Giuseppe Conte, said on social media: “Better late than never.”
The government said on Tuesday that the threshold for imposing the 40 per cent levy would be based on the difference between net interest income in 2021 and the figure for 2022 or 2023, whichever was larger. Banks would pay the tax once their net interest income for the selected year exceeded 2021 by either 5 per cent or 10 per cent.
Financial Times
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