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What I know about the financial markets and the economy I learned working for one of the main investment firms of Piazza Affari, the companies that buy and sell shares on the stock exchange for large investors. I took it with me when I became a journalist for Repubblica where, among other things, I dealt with investigations and major scandals such as Parmalat, helping to unmask its false financial statements.
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It didn’t go well with the tax on extra profits of energy companies launched by Draghi government when the surge in the price of gas brought the cost of a megawatt hour to 300 euros. Of the 11 billion expected, about 2.5 billion had been collected and it caused such a huge wave of protests and legal disputes by companies, that the subsequent government led by Giorgia Meloni decided first to rewrite it and then to make it harmless.
Yet the Meloni government is now trying again with the banksplacing himself for the umpteenth time in the wake of the much you criticized the Draghi government when he was a member of the opposition benches.
Criticisms of the ECB’s monetary policy. The current executive through the mouth of some of its most important representatives has repeatedly railed against the European Central Bankguilty of having raised rates repeatedly, without ever a moment’s respite.
The misalignment. A wave of price increases that has allowed the banks to achieve record profits also to the detriment of current account holders and businesses which, on the one hand, have seen their mortgages and the cost of financing rise, but on the other have not received adequate remuneration on the money deposited in the bank. While mortgage rates soared over 4%, liquidity on current accounts continued to yield zero or just over zero.
Tax the interest margin. Now this difference, which has allowed the banks to cash in substantial profits, will be taxed. The tax will in fact be applied on the difference between the interest margin that banks realized in 2021 and the following years.
The interest margin of banks is a balance sheet figure which is obtained from the difference between the interest that the bank collects by lending money to companies and customers and the interest that the bank pays, for example, to current account holders or anyone else (such as the Central Bank, bondholders and other banks…) lend them money for their business.
How the fee is structured. The tax will be triggered if the interest margin has grown compared to 2021 by 5% in 2022 e by 10% in 2023. It will be from 40%but it cannot be higher than 0.1% of assets of each individual bank, because otherwise there would be the risk of weakening too much the regulatory capital that banks must have by law in order to be able to lend money. And it will have to be paid in 2024.
Who pays and how much. The collection, estimated on the basis of the assets of the Italian banks updated in May by the Bank of Italy, equal to 3,952 billion, should be around a maximum of 3.95 billion with different impacts on each credit institution.
According to the calculation of the US investment bank Jefferieswith reference to the 2022 assets data, the most affected will be the large Italian regional banks, the same ones that will have the most difficulty in obtaining funding on the markets due to the monetary tightening implemented by the ECB.
The People of Sondrio will suffer a withdrawal equal to 18% of the 2022 profit cumulative with the 2023 profit estimates, the People of Milan 16%, Bper e we by 15% and Banca Intesa by 13%, against an industry average of 12%, which is what it will suffer Unicreditthe other major Italian bank.
How will the funds be used? The proceeds raised with the new tax will go to finance some items of the budget law on which the government will start working after the summer. In particular they will serve, according to Salvini’s words, to give support to who bought a first home and we have seen the mortgage payments jump upwards and to finance cutting the tax wedge whose resources will end at the end of 2023 (we need between 3 and 4 billion).
The example of Spain. Italy is not the only country to have thought of taxing the extra profits of the banks. Spain, led by a centre-left government presided over by Pedro Sánchez, was the first to introduce it. It is a fee equal to 4.8% of the interest margin and commissions and concerns banks that in 2023 and 2024 will realize an interest margin exceeding 800 million euros.
The different use of resources. With the approximately 3 billion in collections estimated, Sanchez, unlike the Italian government, aims to increase welfare to help the weakest. As? By increasing unemployment benefits, the monthly contribution of 100 euros for mothers with children aged from zero to three years (which until now was limited to female workers), the “ingreso mínimo vital” (Spanish version of basic income) by a 8 .5 percent, which will benefit 1.2 million Spaniards, and 620 million euros for assistance to disabled and non-self-sufficient people.
The criticisms of the ECB. However, the Spanish move was not liked by the European Central Bank, which at the moment has not yet pronounced itself on the Italian tax, but which most likely, should it speak, could express itself with the same words.
Then, in November of last year, he put pen to paper after a question from the Spanish Central Bank that the extra taxes could have created instability in the banking sectorespecially in a scenario where the ECB is applying monetary tightening.
The underestimation of politicians. For central bankers, the scenario favorable to the banks with the rate hike is only temporarybecause with the deterioration of credit conditions, institutions will soon have to face bankruptcies and crises of companies that have entered into difficulties precisely due to the impossibility of accessing new loans.
Spanish politicians, therefore, have not taken into consideration the whole process and, in order to have a momentary advantage, now risk putting the entire financial system in difficulty and consequently the growth of the Spanish economy.
Two different locations. Hard to say who is right, but we are faced with a clash of titans. On the one hand the governmentsopposed to interest rate hikes, tax the extra profits of banks to raise resources for the benefit of their fiscal policies and accuse the ECB of pushing the economy into recession, afflicting consumers and businesses.
On the other the Bce that wanting to protect the economy (including citizens and businesses) from inflation, has acted on the cost of money trying to juggle between increases and the danger of recession and now sees in the action of governments against banks a further threat of instability that could speed up the dreaded fall into recession.
Of course, we are moving along a very narrow street and a slowdown in the economy would be a defeat for everyone.