Italian banks under the market scrutiny after extra-profit tax shock. Lenders begin to calculate the impact of the levy, while bankers and investors reject the move by the Meloni government.
Italian banks remain observed special markets and politics after the shock of the tax on extra profits announced a few days ago by the Meloni government. Tax that has been filed, but which still remains a threat, as various analysts, economists and bankers themselves claim: and not only for dividends – and in particular those promised by UniCredit are decidedly greedy – but also for profits and, therefore , for the same credit granted to the real economy.
The official position of the Abi is awaited, the Italian Banking Association led by Antonio Patuelli which, yesterday, met its presidential committee, dedicating the meeting to the tax, which fell on the Italian banking sector at the beginning of the week as a bolt from the blue.
Lightning from the blue as the made in Italy banking sector was experiencing a good momentum, on the strength of the excellent quarterly results pitted by the heavyweights of the sector and, also, of the positive indications that emerged with the publication of the results of the stress tests launched by the EBA, the Italian Banking Authority, and by the Supervision of the ECB.
From the stress tests it had emerged the surprise Mps, but also that of FinecoBank, and the one by Credem.
All this, while the quarterly season saw the protagonist, again, the excellent accounts of UniCredit, with lots of new dividend surprise baked by Ronaldo dei Banchieri Andrea Orcel.
Mps is also very good, apparently ready, for some time now, to leave behind that reputation as the Achilles’ heel of the Italian financial system that had chased it for years, thanks to the strong recovery in profitability.
The outcome of the ECB and EBA stress tests boded well for the industry.
But the shock of the tax on extra profits immediately triggered panic, fueling a wave of doubts about the banks’ ability to continue generating solid profitability and, at the same time, to be able to provide credit to households and businesses (at a time when the same institutions fear a growth in non-performing loans, NPLs, and are therefore preparing to become more severe with customers and potential customers).
Suddenly, the earnings outlook was made with the withdrawal news, definitely more obscure. Not to mention the damage the ad did right away to the market-friendly image of the Meloni government.
READ ALSO
Extra profits, speak Moody’s. With Meloni VS banks and ECB BTP risk?
Extra profit tax on Italian banks, Fitch: it will affect profits but not ratings
Bank extra profit tax: the Giorgetti case and the attention of the FT
Besieged by criticisms from many quarters, the Meloni government immediately turned aroundalbeit in a way that several investors and analysts have considered rather clumsy, and certainly very chaotic.
The decision to correct the shot, putting limits on the levy on extra profits, was also considered not very transparent, given the inaction of the Minister of Economy and Finance Giancarlo Giorgetti.
It is in this context that the ABI met yesterday, defining itself as “surprised by the tax”. However, the Italian banks also spoke out “very united”.
For his part, the number one of the Abi Antonio Patuelli, in agreement with the Italian credit institutions, invoked an attitude based on “caution, firmness, seriousness and a sense of responsibility”, in order to don’t let things “rush”.
Today a note from Equita SIM referred to the meeting citing the rumors about the proposals put forward by the Italian Banking Association.
Among these, “according to what Milano Finanza reports – Equita summarized – there would be that of the “tax deductibility of the tax over the next five years, for a possible saving that The messenger it amounts to 800 million”.
“Furthermore, according to sources reported by The messengerit would remain to be clarified whether even the interest margin produced by government bonds to be included in the calculation of taxation”.
Banks, Passera (Illimity): shooting in the crowd, credit at risk
In the meantime, several bankers have made their dissent heard by commenting on the move by the Meloni government, with statements that they have barely managed to hide the profound bewilderment that is shaking the sector.
Two days ago he had already made himself felt Corrado Passera, CEO of Illimity:
“By throwing off the pile, as is being done, the risk, paradoxically, is that of discouraging credit to small and medium-sized enterprises and households“, thundered the banker, recalling that, “in these two years”, Italian banks have “increased the volumes of loans to the real economy”, keeping “the spread unchanged, adjusting the remuneration of deposits, including sight deposits ”.
This, to find each other “punished with a tax sting which adds to the increased credit risk they have taken.”
Corrado Passera has also returned to speak in the last few hours, giving an interview to the newspaper The Republic with which he returned to the question of the tax on extra profits.
The rule, hoped the number one of Illimity and former CEO of Intesa SanPaolo, also former minister of the Monti government, “it needs to be reviewed, to look for solutions without too many negative effects”.
“A me it sounds bad to hear about fair or unfair profits referring to political assessments and not to compliance with existing rules”, the banker also commented.
The comment clearly referred to that phrase of “unfair margins” which, the day before yesterday, was uttered by the Prime Minister herself Giorgia Meloni, which has completely armored the raison d’être of the levy.
The surprise effect of the government “it will have negative consequences for a long time – Passera pointed out – A bad page on the Stock Exchange: overlapping figures and forecasts, dramatic percentages of effects on bank assets, parameters that changed with open markets”.
The measure, said Illimity’s number one again, risks really affect the disbursement of credit, in a context in which, among other things, the credit crunch alert has already been triggered:
“In fact we are already in contraction in Italy: especially credit to SMEs, which emerges less from the statistics but is decreasing a lot”.
After the damage to Piazza Affari, triggered by the sudden announcement of the tax on extra profits, some Italian banks have already started to calculate the impact that the withdrawal would have on their respective accounts.
The impact of the tax on Bper Banca’s extra profits, for example, should be 152.3 million, reported Il Sole 24 Ore, referring to what emerged from the accounts of Unipol (majority shareholder of the Italian bank with a stake of 19.9%).
Yesterday the declarations of other minor banks also arrived, such as Banca Valsabbina which, in the note relating to the results for the first half of the year, underlined that it will “carefully follow the regulatory process of the provision” on extra profits, in order to “completely evaluate the possible impacts on the institution’s net profitability”.
She also made herself heard Ethical Bankby voice of president Anna Fasano, launching the alert on the risk of a further credit crunch.
“To calculate the extraordinary tax on the increase in the interest margin means identifying the bank’s typical activity as the basis for taxation: intermediation and disbursement of credit, with the effect of inhibiting institutions from strengthening this activity and prompting them to put energies and resources into the distribution of various services (insurance products of third parties, etc.) and in trading, even speculative – for example credits from tax bonuses – whose results are not affected”, said Fasano, adding, according to what was reported by the Ansa agency, that the measure “will cause a further credit crunch”.
READ ALSO
Bank extra profit tax, Meloni government corrects the shot. The reaction after Black Tuesday
Bank extra-profit tax, the Mef explains the levy. In Piazza Affari, institutions lose almost 9 billion in capitalization
Bank extra-profit tax, for Salvini-Tajani the fault of ECB rates. KO stocks on the Stock Exchange
Italian banks, shareholders: ‘tragic move, confiscation of profits’
In addition to the bankers, some analysts from the research divisions of some also took the field large shareholders of Italian banks, as the Financial Times article reported “Top investors attack Italy’s botched windfall tax on banks“:
“A tragic move – commented David Herro, investment manager of the US division of Harris Associates, sixth most important shareholder of Intesa SanPaolo – For years the banks have struggled in a context of low interest rates. Nobody asked almsgiving or help. Now finally we see some form of normalization and the government confiscates the profits”.
Oliver Collin, co head of the European equity division of Invesco, one of the main shareholders of UniCredit, he further argued that the extra profit tax reflects “a combination of lack of clarity and a total about-face in terms of politics”.
Jérôme Legras, managing partner of Axiom Alternative Investments, also referred to the confusion with which the provision was announced, shareholder of Italian banks including UniCredit and Intesa Sanpaolo:
“Everything is a bit confused – said Legras – The numbers weren’t clear, took everyone by surprise, in the middle of summer, and the way the announcement came about was strange.”
For his part, Justin Bisseker, an analyst in the banking division of Schroders, who is among the top ten shareholders of Intesa SanPaolo and one of the top 15 shareholders of UniCredit, recalled that “for a long time, investors have been reluctant to trust bank stocks” , due to “those scars” left by “global financial crisis, the euro crisis, the arrival of more rules” issued to regulate the sector.
In short, a chorus of criticisms from the world of investors against the move by the Meloni government, which left not only Piazza Affari but also the City and the world financial markets.