Santander boss Ana Botín has hit out at a tax windfall on financial institution income as cash-strapped European governments contemplate raiding lenders benefiting from rising rates of interest.
Because the third largest financial institution within the eurozone, Santander shall be one of many hardest hit by the Spanish authorities’s proposal to boost €3bn from banks to cushion the influence of rising vitality costs.
International locations together with Hungary and the Czech Republic have introduced further taxes on banks to cut back the influence of vitality costs.
“Increased taxes have to be the identical for all firms and . . . the federal government should determine what’s the proper degree of tax that actually permits sustainable development and funding,” Botín, who’s the financial institution’s govt chair, mentioned in an interview for the Monetary Occasions International Banking Summit.
He cited figures from the Spanish Banking Affiliation, which confirmed that if banks have been compelled to pay a tax of €3bn, it could cut back their lending capability by €50bn as it could cut back the quantity of regulatory capital they may maintain towards these loans.
“We want . . . sustainable development, non-inflationary development – and banks are basic in that equation,” he added. “That is what the federal government wants to know.”
The European Central Financial institution has additionally criticized Spain’s proposed windfall tax, saying it may injury the financial institution’s capital place, disrupt financial coverage and be tough to implement.
The Socialist-led coalition authorities of Pedro Sánchez plans to impose a 4.8 p.c tax on banks’ earnings from curiosity and commissions for 2 years, saying the rise in rates of interest is producing “great” positive factors for the sector.
Final month Santander reported an 11 per cent year-on-year improve in internet earnings to €2.42bn within the third quarter. Different European lenders have additionally reported bumper income because of rising rates of interest.
However Botín mentioned the rise in income was an indication of a return to regular enterprise circumstances for banks after greater than a decade of low and detrimental rates of interest.
“When there may be discuss of extraordinary income, that isn’t the case within the banking sector.
“That is excellent news – you want robust banks to have a powerful economic system. For those who have a look at what the US economic system has accomplished over the past 10 years in comparison with the UK and Europe usually, a number of it’s actually primarily based on [the US having] very robust banking sector.”
In his Autumn Assertion on Thursday, UK Chancellor Jeremy Hunt decreased the nation’s surcharge on financial institution income from 8 p.c to three p.c, which is able to take impact subsequent April and an increase in company tax from 19 p.c to 25 p.c.
In England, the financial institution will due to this fact pay an efficient price of 28 per cent, 5 share factors lower than underneath the earlier plan, a transfer aimed toward growing the attractiveness of the Metropolis of London following the turmoil of Brexit.