Bank profits tax, there is the draft: either they pay or they strengthen the capital

Agreement found in the majority, after a long negotiation: there is the draft text that will arrive in Parliament. The maximum withdrawal ceiling changes, and above all the institutions will be able to choose: either they pay immediately, or they put 2.5 times the sum into the bank’s capital, with the aim of strengthening their assets. The Government’s expected revenue of 2.5 billion is at risk

Agreement reached in the majority on the tax on banks’ extra profits. After a long and difficult negotiation: the rule was inserted, surprisingly, into the decree of 8 Augustto tax the so-called “extra profits”i.e. the extra money earned by banks thanks to the sharp increase, over the last year and a half, in interest collected when they lend money to families and businesses.

A rule that immediately sparked controversy (Forza Italia the most skeptical part of the majority) and doubts (also on the part of the ECBwhich on 13 September had sent a letter to Rome raising concerns about “damage to trust and increased regulatory uncertainty”).

Ceiling at 0.26% of assets, but excluding government bonds

There are two main changes, compared to the text of the decree, which will be subject to an amendment when converted into law in Parliament. First of all, the maximum ceiling will be 0.26% “of the weighted average assets”, a budget item that effectively excludes profits made with government bonds. The initial hypothesis was 0.1% “of the bank’s assets”, therefore a lower percentage but on one item much wider. The experts’ initial calculations, based on the overall figure (communicated by Bank of Italy) of approximately 3 thousand billion in assets of Italian banks, had estimated the maximum conceivable revenue for this new tax at just over 3 billion.

Tax that is parameterized on the last one two-year period. Going into detail, it is calculated “by applying arate of 40% on the amount of the interest margin” for the 2023 financial year “which exceeds the same margin” for the 2021 financial year by at least 10%. The previous version was calculated differently on the 2022 budget (excess of 5%) and on the 2023 one (excess of 10%).

Choice of bank: I pay or charge to reserve

Secondly – ​​and above all, one might say – banks will be able to choose between paying the tax immediately or freezing it, allocating it two and a half times the amount due “to a non-distributable reserve”, we read in the draft circulating at the moment. That is, it will strengthen the capital solidity indices of the banks. The tax will be paid, if deducted, only if that asset is distributed to shareholders in the form of a dividend.

Another important news concerns the destination of this revenue: it expands, because in addition to reducing the tax burden of families and businesses, it will also refinance the Guarantee fund established at Mediocredito Centrale which insures bank loans in favor of small and medium-sized businesses.

Revenue expected by the Government at great risk

All these elements can be read in the Government’s draft amendment which should be filed in the Senate in the next few hours, in view of the discussion on the conversion into law of the decree issued at the beginning of August. With the new regulatory framework that emerges, the revenue expected by the Government, which is around 2 – 2.5 billion, it could reduce noticeably. For plausible numbers, we need to wait for the experts’ first simulations.