Spain courts ECB about new bank taxes

According to Economy Minister Nadia Calvino on Thursday, the Spanish government has been in communication with the European Central Bank regarding the impending implementation of the banks tax plan, which aims to reduce profits from rising interest rates.

Before proposing the tax, which imposes a 4.8 percent charge on banks’ net interest income and net commissions, she said the administration had carefully considered its effects. She expressed her optimism that parliament would quickly adopt the tax policy.

“This morning we had the opportunity to speak with the ECB teams, who are naturally looking at the aspects to be taken into account when establishing this type of levy, bearing in mind the ECB’s responsibilities in the area of supervision, financial stability,” Calvino said to a group of pressmen in Frankfurt.

Two sources with direct knowledge of the situation revealed earlier this week that the ECB planned to warn of the proposed tax’s detrimental effects on Spanish banks’ viability in an upcoming non-binding opinion.

Governments are not required to take such comments into consideration, but most do so when cautions that could be interpreted negatively are included in proposals.

Under the condition of anonymity, one of the individuals stated that as higher taxes may result in higher lending costs, attention would also be directed to the dangers it poses to the transmission of monetary policy.

“These are all issues that we have of course analysed in depth within the government before presenting the levy proposal,” Calvino said.

The interim bank levy bill was submitted to parliament by Spain’s leftist government coalition in July with the goal of earning $3 billion by 2024.

The industry may have more leverage to ask for changes to the legislation that is being discussed in parliament if the ECB’s warnings are taken seriously.