The Italian Government Drops a 'Bomb', Banca Bilau's Stock Runs Out!

<p>&nbsp;In a surprise move on Tuesday, Italy approved a one-off 40% tax on the profits banks make from higher interest rates.</p><p><br /></p><p>The move comes as a sharp rise in official interest rates has resulted in double profits for Italian banks.</p><p><br /></p><p>The proceeds from the tax will be used to reduce taxes and offer financial support to mortgage holders.</p><p><br /></p><p>Even so, Italian banks say the 'windfall' tax will have a significant negative impact on the sector.</p><p><br /></p><p>The sudden move was approved by members of Prime Minister Giorgia Meloni's cabinet during a meeting yesterday.</p><p><br /></p><p>They pledged to invest the funds raised to help households and businesses struggling with borrowing costs.</p><p><br /></p><p><br /></p><p>The tax will be applied to the net interest income that comes from the gap between loan rates and bank deposits.</p><p><br /></p><p>Around €2 billion is reportedly expected to be generated from the levy, which will be used to fund support for families hit by higher interest rates.</p><p><br /></p><p>The Italian Parliament now has 60 days to pass the tax decree into law.</p><p><br /></p><p>As a result of the action, Italian banking stocks suffered a sharp decline on Tuesday (European session), with BPER Banca falling 10% and Banco BPM down 9%, while Intesa Sanpaolo and Finecobank each fell over 8% and UniCredit fell over 6%. .</p><p><br /></p><p>The impact was also seen outside Italy, where Germany's Commerzbank fell around 3.2% and Deutsche Bank traded 2% lower.</p><p><br /></p><p>To reduce the impact, the government stipulated that the tax would not amount to more than 0.1% of the lender's total assets.</p>