Italian bank shares slide after government surprises with windfall tax

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ROME - August 7, 2023: (L-R) Carlo Nordio, Minister of Justice, Adolfo Urso, Minister of Enterprise and Made in Italy, Matteo Salvini, Deputy Prime Minister and Minister of Transport, Francesco Lollobrigida, Minister of Agriculture and Orazio Schillaci, Minister of Health hold a press conference at Palazzo Chigi at the end of the Council of Ministers No. 47. Italian banking shares took a beating on Tuesday morning after Italy's cabinet approved a 40% windfall tax on lenders' "excess" profits in 2023. As of 10:49 a.m. in Rome, Finecobank and BPER Banca shares were almost 8% lower, while Intesa Sanpaolo and Banco BPM shares were both down over 7%, and UniCredit's fell 6%. The effects were seen beyond Italy, with Germany's Commerzbank down around 3.2% and Deutsche Bank trading 2% lower. Italian Deputy Prime Matteo Salvini told a press conference on Monday that the 40% levy on banks' extra profits derived from higher interest rates, amounting to several billion euros, will be used to cut taxes and offer financial support to mortgage holders. "One only has to look at the banks' first-half 2023 profits, also the result of the European Central Bank's rate hikes, to realise that we are not talking about a few millions, but we are talking one can assume of billions," Salvini said, according to a Reuters translation. "If [it is true that] the cost of money burden for households and businesses has increased and doubled, it has not equally doubled what is given to current account holders."