Spain readies 5% bank levy on interest, commissions, sources say

MADRID, July 18 (Reuters) - Spain's government is readying a levy of just below 5% on net interest income and banking commissions as part of a package to raise 3 billion euros ($3.05 billion) to help tackle the impact of inflation, two sources with knowledge of the matter said.

Spanish Prime Minister Pedro Sanchez said last Tuesday that a temporary banking tax would be imposed in 2023 and 2024 but gave no further details. Another tax, on energy companies' windfall profits, is expected to raise 4 billion euros.

Sources said the details were still being finalised and could change at the last minute.

On Monday, Economy Minister Nadia Calvino said the government would start discussing details of the tax with banks on Friday. So far, lenders have not been informed of any details, banking sources have said.

One of the sources said the tax would be "inspired" by a proposal made by the International Monetary Fund in the aftermath of the 2008 financial crisis, calling for a Financial Activity Tax that could apply to all activities of a financial entity.

The second source said the tax would be designed in such a way that banks would be penalised if they pass on the increased costs to the final client.

Last week, Calvino said the reason for taxing banks was to prevent windfall profits from expected interest rate hikes.

Taking into account the 1.2 billion euros of taxes paid by Spanish domestic banks on profits in the prior 12 months as of March 2022, the new tax would represent around 10.3% of the domestic banking system's net profits, according to ratings agency DBRS.

Analysts from Deutsche Bank have said that whatever the final impact on profits, this kind of measure would increase regulatory uncertainty.

($1 = 0.9828 euros)
Reporting by Belen Carreno; additional reporting by Jesús Aguado; Editing by Hugh Lawson

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