The Italian government’s partial u-turn on plans for a new banking windfall tax will likely allow lenders to keep their promises on shareholder returns intact, according to analysts.
(Bloomberg) — The Italian government’s partial u-turn on plans for a new banking windfall tax will likely allow lenders to keep their promises on shareholder returns intact, according to analysts.
The finance ministry said late Tuesday that the levy won’t exceed 0.1% of a firm’s assets, after Deputy Prime Minister Matteo Salvini’s announcement of a 40% tax on lenders’ extra profits the day before wiped out $10 billion from Italian banks’ market value.
The clarification meant it was now “more sustainable” for lenders to fulfill their guidance on an increase in distributions for 2023, Equita Sim Spa analyst Andrea Lisi said.
“Given the contained magnitude of the tax and the high starting CET1 ratio, we believe the measure would not impair banks’ capital return policies,” Andrea Filtri, an analyst at Mediobanca SpA, said in a note on Wednesday.
Last month, UniCredit SpA increased its guidance on 2023 shareholder remunerations for the second straight quarter, saying it will distribute €22 billion ($24.2 billion) under its 2021-2024 business plan period. Intesa Sanpaolo SpA has said it will disburse more than €22 billion to shareholders through 2025.
Italy’s banking stocks reversed some losses on Wednesday morning, with Unicredit up 4.4% and Intesa Sanpaolo SpA gaining 3.2% as of 10:55 a.m. in Milan. The FTSE Italia All-Share Banks Index pared its losses for the week to 3%.
–With assistance from Farah Elbahrawy.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.