The credit rating agency S&P considers that the tax on extraordinary profits of banks announced this week by the Government will be "manageable" for entities. In this way, it cools, in a first assessment, the negative expectations for financial entities, which rejected this new taxation due to the effect it could have on their activity. The multinational considers that it will affect 12% of the benefits of the next two years.
The Government will prohibit energy companies and banks that affect consumers from raising taxes
Little is known for now about the fine print of this new tax. It has not been possible to advance the calculation method or what the tax base will be. However, S&P has made a projection based on the Executive's forecast of collecting 1,500 million annually with this new tax, which would be 3,000 million euros in the two years that it will be in force (2022 and 2023). With this, and based on the forecasts of the economy and the results of Spanish banks, the agency puts the cost for banks at 12% of profit. “It will be great
“The immediate negative market reaction —banks collapsed on the stock market— It is understandable because this measure will weigh on the profits of Spanish banks”, says the S&P report published this Thursday. "However, we view the effects of the tax as largely manageable from a ratings perspective if our current macroeconomic assumptions hold," the note added. “The 3,000 million additional fiscal cost in 2022 and 2023 are equivalent to approximately 12% of the final national result that we expect for the banking system as a whole in the same period and could subtract 70 basic points from the return on capital —ROE— of the banks” , he emphasizes.
The agency acknowledges that the announcement was a "surprise" because until now the debate on taxing "profits from heaven" had focused on the energy sector. However, he points out, “this is not new in Europe”. S&P recalls that since the last financial crisis initiatives to impose new taxes on banks have proliferated under different names in Europe. He points out, for example, that, due to the pandemic, a tax on banks has already been approved in Denmark that will be fully in force next year. More recently, Hungary has announced a new income-based tax and Poland one known as “social contribution”. S&P points out that even in Italy this idea is under consideration.
The agency already issued a document last June in which it advanced the possibility that new taxes would be imposed on banks for the benefits that fell from the sky. Those extra profits that they will receive due to the rise in interest rates. In this report, S&P pointed out that the increase in interest rates means “that most European banks will benefit from an increase in income due to the increase in interest billing”. "At the same time, the finances of households, businesses and governments are under pressure from weakening economic growth and persistently higher inflation," he notes.
"Taxes and levies in the banking sector are already in force in many European countries and there are signs that they could proliferate even more," the document pointed out, assuming that announcements such as the one that Spain has subsequently made were foreseeable. “They are unlikely in themselves to lead to ratings [de deuda] lower," he says. Although, the agency concluded that if the economic conditions are finally seriously affected by the situation of high inflation, in that case it could affect the solvency of the banks. “Unless taxes are at levels that banks find it difficult to pay, it is unlikely to lead to rating downgrades,” he emphasizes.
The bank employers in Spain came out in a storm on Tuesday against this new tax in Spain. The AEB, for example, spoke of "legal improvisation" and that it "distorts the market." The CECA, for its part, considered that the decision "does not contribute to harmonizing tax regimes within the banking union." Both employers came to question, in fact, that the rise in rates will lead to an extraordinary increase in profits for entities.
This Thursday, BBVA Research, the center for economic studies of the bank chaired by Carlos Torres, has assured that "it makes no sense to penalize specific sectors such as the banking system" that "does not generate negative externalities in the rest of the economy". "On the contrary, it facilitates the allocation of productive resources to more dynamic and faster-growing sectors," he stressed.