Italy’s deputy prime minister pushes to water down bank windfall tax

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Italy’s deputy prime minister has called for the government’s bank windfall tax to be watered down just a week after the controversial levy was unveiled, in a sign of mounting tensions within the rightwing coalition.

Antonio Tajani, who also serves as foreign minister and leads the Forza Italia party, said in an interview published on Tuesday that the windfall tax should not apply to the country’s smaller lenders.

Tajani told Naples-based daily Il Mattino that he wants the government to only apply the levy on the incomes of larger lenders that are overseen by the European Central Bank.

“The main thing we are asking for, is for the banks that aren’t under the ECB’s [supervision] to be excluded from the tax,” said Tajani.

The foreign minister said he was also planning to back a proposal by the ABI, the national banking association, which is asking for the levy to be tax-deductible.

He also wants to hold a workshop with banks’ representatives next month to discuss the tax.

Only a dozen of Italy’s largest and most complex lenders are supervised directly by the ECB.

The 12 are UniCredit, Intesa Sanpaolo, Monte dei Paschi di Siena, Mediobanca, Iccreo, Fineco, Credito Emiliano, Cassa Centrale Banca, BPER, Banco BPM, Banca Popolare di Sondrio and Banca Mediolanum.

Analysts have warned that smaller banks would struggle to pay the charge without facing financial stability problems.

Tajani’s attempt to distance himself from the levy comes after prime minister Giorgia Meloni said she took “full responsibility” for the tax, which will apply to net interest income.

Tajani said: “I understand the prime minister’s [position] but we [Forza Italia] won’t change our mind.”

The measure sent shockwaves across financial markets last Tuesday after Meloni’s junior coalition partner, Matteo Salvini, leader of the rightwing League and the country’s infrastructure minister, unveiled the windfall tax on banks at a late-night press conference.

Italian banking stocks shed €10bn the following day as analysts and investors struggled to assess the damage imposed on the sector by the levy.

Following the share price falls, the government watered down the measure last Tuesday evening, saying the amount taxed would be capped at 0.1 per cent of banks’ total assets. The one-off levy would raise €2bn, based on current government and analyst estimates. The figure would probably shrink if small lenders were excluded in line with Tajani’s proposal.

Tajani is not the first member of the governing coalition to raise objections to the idea. Finance minister Giancarlo Giorgetti had repeatedly dismissed the possibility of a windfall tax before it was unveiled.

Industry associations have also suggested they will push for substantial revisions to the measure, which needs to be converted into law by early October. Parliament will debate its details before it becomes law.

Additional reporting by Martin Arnold in Frankfurt