Spanish banks weigh impact of windfall tax, consider legal challenge

By Jesús Aguado and Emma Pinedo

MADRID (Reuters) – BBVA and Caixabank on Friday stated they have been wanting on the potential affect of a proposed tax on banks in Spain and exploring taking authorized motion to problem the transfer.

Spain’s leftist ruling coalition launched a draft invoice in parliament on Thursday to create a short lived tax on banks and enormous vitality firms, aiming to lift 7 billion euros ($7 billion) by 2024 to fund measures to ease value of residing pressures.

The tax, plans for which have been first set out on July 12, would come with a 1.2% levy on Spain’s massive vitality firms’ gross sales and a 4.8% cost on banks’ web curiosity revenue and web commissions, the textual content of the proposal confirmed.

“We now have the power to discover all of the alternate options, together with the authorized angles on this, however we’ve to first see the ultimate particulars of the proposal,” BBVA’s Chief Government Officer Onur Genc stated on Friday when requested concerning the invoice.

On Thursday, Repsol’s CEO Josu Jon Imaz stated he was assured regulation would defend his firm from the affect of the measure.

Any potential authorized problem from the banking business as an entire towards the federal government would represent an unprecedented authorized transfer. Technical particulars of the plan have been nonetheless being mentioned and the draft tax proposal must be debated in parliament the place adjustments may very well be launched.

On Friday, Caixabank’s Chief Government Officer Gonzalo Gortazar additionally stated that the financial institution would preserve all “choices on the desk like another entity”, when requested if the financial institution would take authorized motion towards the Spanish authorities.

The tax on banks – whose web curiosity revenue is a measure of earnings on loans minus deposit prices – is anticipated to yield 3 billion euros between 2023 and 2024, based mostly on the proposal.

Gortazar estimated the tax may initially have an effect on Caixabank of between 400 million to 450 million euros measured towards 2022 projected web curiosity revenue and web charges. BBVA’s Genc anticipated a success of round 250 million euros.

Each executives stated it was to early to evaluate the complete affect of the levy, which they thought-about would damage lending, and financial development, and likewise have an effect on competitors as smaller lenders wouldn’t be affected by it.

“This isn’t good for Spain, it will result in much less funding, much less financing and fewer development,” Genc stated.

Gortazar and Genc additionally stated that larger borrowing prices shouldn’t be thought-about extraordinary positive factors since unfavourable rates of interest have weighed on banks for a number of years.

Spain’s Prime Minister Pedro Sanchez stated on Friday that the very fact the bankers “have been complaining confirmed that we have been on target.”

Conferences between the Price range Ministry and banks and vitality firms have been additionally happening on Friday to current the small print of the levy, Genc and a authorities supply confirmed.

Financial institution of Spain Governor Pablo Hernandez de Cos prompt this week that the ECB may challenge a unfavourable opinion on the tax.

(Reporting by Jesús Aguado and Emma Pinedo; further reporting by Isla Binnie; modifying by Jane Merriman)