Banks await legal battle after Congress approves new tax

The new banking tax, approved by the House of Representatives on Thursday, drew harsh criticism from the CEOs of main banks operating in Spain today, whose legal departments are analyzing possible appeals before the courts.

The employers’ association AEB, which represents the main banks in Spain, says there are “enough” elements to fight in court, and Bankinter announced it will go to court “the next day” to settle the tax. The rest of the entities are waiting to learn the final text to take action.

4.8% of income

There are doubts about the transit ban

The new tax accounts for 4.8% of the interest margins and commissions of banks entering more than 800 million euros per year in Spain. The royal decree, approved last Thursday, prohibits it from being passed on to consumers, but banks and the ECB have doubts that this imposition can be established. If appealed, organizations will have to terminate their quarterly tax payments, as they do not have the power to go directly to the Constitutional Court.

CEOs of BBVA, Santander, CaixaBank, Sabadell and Bankinter met this morning at an industry meeting organized by Expansión and KPMG. Leaving aside some nuances, they did not shy away from tax criticism, which was approved days after a major deal was signed between banks and the Government to help people with mortgages in distress.

Onur Young

BBVA: “It will affect the economy”

Onur Genç, CEO of BBVA, said that “this tax will affect the growth of the Spanish economy” and that “it is not the best time to implement it”. “We will follow what the law says, that is out of the question” but “any academic document shows that when you impose a tax it is to restrict a certain activity and that banking activity cannot be restricted because it is now there for the economy”

Antonio Simoe, CEO of Santander Spain, was also very critical, describing the tax as “very bad for the competitiveness and confidence of investors in Spain”. “There is quite a consensus that this is not the best way to fight inflation, even if the European Central Bank says so,” he said, before considering it “bad for the Spanish economy, for companies and families.” “for small bank shareholders”.

Santander ensures that Spanish banks’ profitability of around 8.8% remains below their cost of capital, which is between 10% and 11%, which is a “competitive disadvantage” compared to other countries. Banks also complain that their listings are below the book value of their assets.

Ratings

CaixaBank and Sabadell move from “bit by bit” to “significant issues”

CaixaBank CEO Gonzalo Gortázar stated that his establishment will go “bit by bit”. “We need to see the final text” and from there “if we think it is not in accordance with the law, our obligation will be to object to it.”

Sabadell’s chief executive, César González-Bueno, said the regulation contained “significant problems” because it did not pass the State Council and did not have the “necessary calm”. “The guidelines of the European regulator EBA mention that all elements in loan costs, including taxes, must be taken into account”, so that the new tax should be passed on to the consumer, he said.

“The problem of speedy enactment and bypassing procedures. The tax looks bad to us, obviously,” the manager assured. “Logically, we should communicate that. Customers will pay for it here, not there. The motivation for a tax that is built too badly and too quickly, and for reasons that are not necessarily more efficient in the economy, is not well known.

Víctor Iglesias, CEO of Ibercaja, assessed that the asset “likely” would go to court “if it emerged in the current circumstances”. Bankinter CEO Soledad Dancausa was also very critical, saying the bank would appeal “next day” for being “unfair, discriminatory and confiscating”.

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