ROME (Reuters) -Italian banking stocks rose in early trade, regaining some of the ground lost after the government late on Tuesday announced a cap on a windfall tax for the country's lenders. Intesa Sanpaolo, Banco BPM and UniCredit were up by between 1.7% and 2.5% as of 0730 GMT, while Finecobank was the best performer with a 4% rise. Italy's economy ministry clarified that its 40% windfall tax, which targets profits banks have made on higher interest rates, would not amount to more than 0.1% of their total assets.
A drive to shore up its political base and appeal to the less well off lay behind the Italian government's decision to impose a windfall tax on banks but its clumsy handling could do more harm than good by shaking investor confidence. A market rout prompted a hasty clarification on the one-off 40% bank levy, which the government later said would be capped at 0.1% of bank assets in line with European Union recommendations. The Treasury expects to draw less than 3 billion euros ($3.3 billion) from the measure, sources have said, or roughly 3% of this year's budget deficit target.
Italian banks such as Intesa Sanpaolo and UniCredit fell more than 5% after Deputy Prime Minister Matteo Salvini said the 40% levy on banks extra profits will feed items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.
(Bloomberg) Italy’s right-wing government shocked markets with an unexpected tax on banks’ windfall profits, wiping out around $10 billion from the market value of the country’s lenders.Most Read from BloombergMusk Says He May Need Surgery, Will Get MRI on Back and NeckEastern US Prepares for a ‘Potent’ Storm System: Weather WatchPayPal Launches a Stablecoin in Latest Crypto Payments PushHSBC Executive Slams ‘Weak’ UK for Backing US Against ChinaTexas Power Prices to Surge 800% on Sunday Amid