New taxes for EU banks could pose additional risks to stability, says the European Central Bank

The ECB admits that the introduction of such taxes would further worsen the already not very pleasant situation with the value of the region’s banks in the stock markets, reports “Bloomberg”.

While European bank earnings have surpassed previous records, bank share values ​​have not increased significantly compared to the situation before the Covid-19 pandemic, the ECB said in a report published earlier this week.

One of the reasons is the specific taxes for banks, which are being discussed in several EU countries.

Such considerations cause concern for shareholders, argues the ECB.

“In the long term, this may have a negative impact on financial stability, as such banks may have difficulty raising equity capital when needed,” the ECB report said.

“Since the capital needed to support lending is compensated by lending rates, a weak rating in the stock market will directly lead to tighter lending conditions.

As you know, proposals for special additional taxes for banks are becoming more and more popular, as EU governments try to supplement their budgets at a time when borrowing money is becoming more expensive.

Many politicians argue that banks have benefited disproportionately from the rapid rise in interest rates, but have shared little of this wealth with consumers.

The proposals made in the last two years could provide the EU countries with more than 6 billion euros in total, predicts “Bloomberg”.

However, the real benefit could be significantly lower as a result of the use of various legislative “bypasses” that would allow creditors in some countries, such as Italy, to bypass this type of payment.

In Latvia, too, the question of banks’ high profits is topical, and decisions are being made that will affect banking operations in the coming years.