Top global investors condemn Italy’s ‘tragic’ levy on banks after government climbdown
The Italian government is still being criticised by investors over its botched attempt to impose a windfall tax on banks.
Banks were blindsided on Monday evening by a one-off 40 per cent levy on banking profits imposed in response to a surge in earnings caused by higher interest rates.
But following a market meltdown, Rome’s government, headed by Giorgia Meloni, changed tack by announcing the banks would pay no more than 0.1 per cent of their assets.
That sparked a revival of bank stocks, with the country’s largest lender Intesa Sanpaolo and Unicredit both rallying on Tuesday when it was reversed.
But the move has left some of the biggest international investors bewildered.
Outrage: Italian banks were blindsided on Monday evening by a one-off 40% levy on banking profits imposed in response to a surge in earnings caused by higher interest rates
‘The policy is tragic,’ said David Herro, a chief investment officer at US investment manager Harris Associates, the sixth-largest shareholder in Intesa Sanpaolo, Italy’s biggest bank.
‘For years the banks struggled in a low interest rate environment. No one begged, nor should they have, for subsidies,’ he added. ‘Now we finally have some normalisation and the government confiscates profits.’
Jérôme Legras, managing partner at Axiom Alternative Investments, which has shares in Italian banks including UniCredit, said it is all a ‘mess’.
‘The most damaging impact of the windfall tax will be the risk premium that investors will demand to compensate them for any future intervention,’ said Johann Scholtz at Morningstar.
