Bankinter says Spanish bank tax would hurt economy

A woman uses an ATM at the Bankinter bank branch in Madrid, Spain, October 26, 2021. REUTERS/Juan Medina/

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MADRID, July 21 (Reuters) – Senior executives at Spanish lender Bankinter (BKT.MC) said on Thursday that a proposed tax on Spanish banks to help tackle the rising cost of living could hit levels of capital, harming economic growth and undermining investor confidence in the sector.

The Spanish government is holding a meeting with banks on Friday to discuss a planned 3 billion euro ($3.1 billion) levy on lenders. Read more

Bank of Spain Governor Pablo Hernandez de Cos is also expected to attend to focus primarily on the economic situation, two sources with knowledge of the meeting said.

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The proposed taxes add to the uncertainty that is causing investors to turn their backs on the sector and the country, Bankinter chief executive Maria Dolores Dancausa told a news conference.

“Uncertainty generates a lot of damage and is a very slow phenomenon to reverse,” she said, adding that it would also hurt economic growth in Spain.

Dancausa said it was still too early to assess the impact of the tax on Bankinter’s books, adding that it was sticking to the net profit target of 550 million euros for now. 2023.

European Central Bank Vice President Luis de Guindos also said Thursday that it was too early to assess the impact of the tax without knowing the details.

“We don’t know if it will be a tax on profits or (if) it will be a tax on assets,” De Guindos said, adding that no tax should impede credit growth “because it is important for economic activity”.

“We must try to avoid any tightening of financing conditions for households and businesses and … the tax must not harm the solvency of the banking sector,” De Guindos said.

Spain’s Economy Minister Nadia Calvino said last week that the rationale for taxing banks was to prevent windfall profits on expected higher interest rates.

“We view this extraordinary contribution as unfair. It was a total surprise to us,” Bankinter chief financial officer Jacobo Diaz told analysts on a call.

“We still need more explanation on the concept of extraordinary benefits or profits that they are supposed to cover. Whatever additional taxes (that are levied) will create additional stress in terms of capital ratios.”

Diaz was speaking after the lender released second-quarter results that were marked by higher lending revenue. Read more

Senior bankers have told Reuters that higher borrowing costs should not be seen as windfall gains after negative interest rates have weighed on their businesses in recent years.

($1 = 0.9812 euros)

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Reporting by Jesús Aguado Additional reporting by Emma Pinedo and Francesco Canepa Editing by David Goodman and Mark Potter

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