European bank shares tumbled on Tuesday after Italy approved a 40% windfall tax on banks for 2023, sending shivers across the sector that has recorded surging profits as global interest rates have risen.
A gauge of euro zone banks fell 3.7%, and was set for its biggest daily drop since the turmoil in the banking sector in March, when Credit Suisse collapsed.
Analysts at Bank of America estimated the new tax could cost Italian banks between 2% and 9% of their earnings.
For 2023 alone, Italy will tax 40% of banks’ net interest margin, a measure of income banks derive from the gap between lending and deposit rates.
Proceeds from the windfall tax will be used to help mortgage holders and cut taxes, Italy’s deputy prime minister said.
Persons:
shivers, Intesa, ”, Gilles Guibout, Stuart Cole
Organizations:
Credit Suisse, Axa Investment, Bank of America, Spain’s Banco Santander, Germany’s Deutsche Bank, DB, Reuters, Equiti
Locations:
Italy, Europe, Spain, Paris