Italian banks hit with surprise windfall tax

Italy has passed a one-off 40% taxation connected the profits banks gain from higher involvement rates, successful a daze determination that has seen shares plummet.

A hike successful authoritative involvement rates resulted successful grounds profits for Italian banks.

The taxation volition use to the nett involvement income that comes from the spread betwixt the banks' lending and deposit rates.

Proceeds volition beryllium utilized to assistance owe holders and chopped taxes, the authorities says.

The astonishment determination was agreed by Prime Minister Giorgia Meloni's ministers astatine a furniture gathering precocious connected Monday. They vowed to put the funds raised into helping households and businesses struggling with the outgo of borrowing.

"One has lone to look astatine banks' first-half profits to realise that we are not talking astir a fewer millions, but of billions," Deputy Prime Minister Matteo Salvini told a quality league successful Rome precocious connected Monday.

The determination shows the authorities intends "to punish banks' unfair behaviour", a root told the Reuters quality agency,

Defending the move, Foreign Minister Antonio Tajani told the Corriere della Sera paper that the measurement was not against the banks, "but a measurement to support families" and those struggling to wage mortgages.

Around €2bn (£1.7bn) is reportedly expected to beryllium generated from the levy, which volition beryllium utilized to money enactment for families deed by higher involvement rates.

Italy's parliament present has 60 days to walk the taxation decree into law.

Shares successful the country's 2 largest banks, Intesa Sanpaolo and UniCredit, dropped by 8% and 6.5% respectively connected Tuesday greeting pursuing the announcement.

Shares successful Banco BPM, the country's third-largest slope dropped 8.2%, portion the state-owned Monte dei Paschi di Siena dipped by 7.4%. Other banks including BPER Banca, Banca Generali and Mediobanca were besides down.

Other European countries including Hungary and Spain person imposed akin windfall taxes connected banks.

A windfall taxation is simply a levy imposed by a authorities connected companies that person benefited from thing they were not liable for - successful different words, a windfall.