Italy’s banking sector mounted a recovery after the country’s government performed a U-turn on its surprise windfall tax.
Their shares tumbled on Tuesday when they were blindsided 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 the market meltdown Rome’s government, headed by Giorgia Meloni (pictured), 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 climbing 2.3 per cent while Unicredit jumped by 4.4 per cent.
U-turn: Rome’s government, headed by Giorgia Meloni (pictured), changed tack by announcing the banks would pay no more than 0.1 per cent of their assets
Others also recovered some of their weekly losses, with the Banca Monte dei Paschi di Siena up 2.5 per cent and Banca Mediolanum gaining 2.7 per cent.
It also helped lift the wider market with the FTSE MIB, which tracks the 40 biggest stocks on the Italian stock exchange, rising 1.3 per cent.
A similar levy was introduced in Spain last year, but one analyst said that the market meltdown meant it was unlikely to be repeated elsewhere.
‘The most damaging impact of the surprise windfall tax will be the risk premium that investors will demand to compensate them for the risk of future intervention,’ said Johann Scholtz at Morningstar.
He added: ‘Following a similar tax in Spain and a ban on dividend payments during the pandemic, investors will be even more concerned about the risk of intervention from governments and regulators.’
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