ECB not consulted yet on Spanish banking tax proposal, de Guindos says

ECB's de Guindos warns of hit to banks from higher rates
ECB's de Guindos warns of hit to banks from higher rates Copyright Thomson Reuters 2022
By Reuters
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By Jesús Aguado and Emma Pinedo

MADRID - Spain has not consulted the European Central Bank about a proposed banking tax as the plan could still be amended, ECB Vice President Luis de Guindos said on Monday, also warning that care needed to be taken with such measures at a time of economic uncertainty.

In July, Spain's leftist ruling coalition introduced a bill in parliament to create a temporary levy on banks and large energy companies, aiming to raise 7 billion euros ($6.99 billion) by 2024 to ease cost-of-living pressures.

"I am not going to pre-judge, we need to know the details... and it still can be amended, or not," de Guindos told a financial event. "So far the government has not asked us (the ECB) for an opinion."

Even though higher interest rates are boosting banks' financial margins, De Guindos said that a banking levy right now could have negative side-effects.

"We could find ourselves in a situation that requires higher provisions" from banks to cope with higher loan losses.

"We don't have to look just at the short term, let's look beyond it," De Guindos said, warning of the risks to the companies most affected by the energy crunch.

Top executives at Spanish lender Sabadell said on Monday that the proposed tax would directly hit banks' profitability and also distort competition as it targeted lenders with a turnover above 800 million euros, leaving out the units of foreign banks in Spain and also smaller Spanish banks.

"I understand that it is necessary to work together because of the difficult environment ... but just a few banks have to pay," Sabadell Chairman Josep Oliu said. "Therefore ... it is crucial to give it a second thought on how exactly we should work together."

The Spanish government wants the legislation approved before the end of the year.

($1 = 1.0016 euros)

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