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Bankinter says Spanish bank tax would hurt economy

·2-min read
FILE PHOTO: A woman uses ATM machine at Bankinter bank branch in Madrid

By Jesús Aguado

MADRID (Reuters) -Senior executives at Spanish lender Bankinter said on Thursday a proposed tax on Spanish banks to help tackle the rising cost of living could hit capital levels, hurt economic growth and dent investor confidence in the sector.

The Spanish government is holding a meeting with banks on Friday to discuss a planned 3 billion euro ($3.1 billion) levy on lenders.

Bank of Spain governor Pablo Hernandez de Cos is also expected to attend to basically focus on the economic situation, said two sources with knowledge of the meeting.

The proposed taxes add uncertainty that is causing investors to turn their backs on the sector and the country, Bankinter Chief Executive Maria Dolores Dancausa told a news conference.

"Uncertainty generates a lot of damage and is a very slow phenomenon to reverse," she said, adding this would also hurt economic growth in Spain.

Dancausa said it was still too early to assess the impact of the tax on Bankinter's books, adding that for now she was sticking to the net profit target of 550 million euros for 2023.

European Central Bank vice-president Luis de Guindos also said on Thursday it was too early to assess the impact of the tax without knowing the details.

"We do not know whether it will be a tax on profits, or (whether) it will be a tax on assets," De Guindos said, adding that any tax should not impair credit growth "as this is important for economic activity."

"We should try to avoid any tightening of financing conditions of households and corporates and (...) the tax should not damage the solvency of the banking industry," De Guindos said.

Spanish Economy Minister Nadia Calvino last week said the rationale for taxing banks was to prevent windfall profits on expected higher interest rates.

"We consider this extraordinary contribution as unfair. It was a complete surprise to us," Bankinter finance chief Jacobo Diaz told analysts on a call.

"We still need more explanation about the concept of the extraordinary benefits or profits that they are supposed to cover. Whatever additional taxes (are levied) will be an additional tension in terms of capital ratios."

Diaz was speaking after the lender published second-quarter results marked by a rise in lending income.

Senior bankers have told Reuters that higher borrowing costs should not be considered extraordinary gains after negative interest rates have weighed down their business over recent years.

($1 = 0.9812 euros)

(Reporting by Jesús AguadoAdditional reporting by Emma Pinedo and Francesco CanepaEditing by David Goodman and Mark Potter)

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