they can affect the credit and must be transferred to the customer

The European Central Bank (ECB) asked this Thursday at the Government yes al Congress do a “in-depth analysis of possible negative consequences” from ‘Bank fees that finalize, to “guarantee” that it does not involve “risks for the financial stabilitythe resilience of the banking sector e granting of creditswhich could adversely affect the effective economic growth“The privilege, he warned, must “consider carefully” in terms of the impact on the profitability of entities, as lower profitability can affect their generation of capital and therefore their ability to lend.

The monetary authority was also criticism with the provision of law proposal Presented by PSOE and United We Can at the request of the Executive prevents to banks shift the cost of the pledge on them customers. “The ECB generally expects credit institutions, in accordance with international good practice, to take into account and reflected in the prices all related costs, including tax considerationswhen appropriate “, he stressed. He also warned him “It looks difficult” That CNMC can determine whether or not said transfer to the customer took place “in the current context of interest rate rises, inflation or deterioration in risk premiums”.

This is how it is collected non-binding opinion on the levy issued by the monetary authority in response to the request made by the Spanish legislative chamber. With the generally moderate tone which it usually uses in this type of judgment, the ECB has nevertheless made it clear he doesn’t like the “tax” promoted by the Government, with arguments very similar to those put forward by the same bodies since last July. From the outset, the body chaired by Cristina Lagarde comes to request that the increase in rates causes a extraordinary profit or ‘fallen from the sky’ to the banks, as the Executive claimed to justify the tax.

positive and negative effects

True, the central bank acknowledges, that income of entities go up like boys do. But said increase in the price of money, he adds, can also cause a lower volume credit activity, losses in securities portfolios, increase unpaid and increase of provisions to deal with the deterioration of assets. “So, the net effect of the normalization of monetary policy on the profitability of credit institutions could be less positive or even negative over a long time horizon “, he concludes.

The ECB also warned that, taking as reference the interest and commission income of 2019 and not the final results of 2022 and 2023, there could be entity with some “low profit or loss” show them forced to pay the tax in 2023 and 2024 on the results of previous years. This, he highlighted, “would distort significantly e it would hurt even more the resilience of a losing bank ”.

The entity also warned that the application of the ‘tax’ only to certain entities Spanish companies (those with less than 800 million in interest and commission income in 2019) “could distort competition in the market e undermine the level playing field both within the country and across the banking union. ”Additionally, he recommended separate income which are obtained from the ‘tax’ of the global collection of taxes “to avoid its use for the purpose of consolidating the general budget”.

Government response

Despite these comments, the the government interpreted that the “ECB does not emit a contrary opinion of the pledge, ago recommendations and is pronounced technical aspects of the rule that it deems necessary to clarify “, according to sources of the Executive.” These considerations are relevant for any tax of this type that can be develop in another country. All these considerations have been taken into consideration by the government before making the proposal, “he added.

The sources, likewise, pointed out that the results of large entities known in recent weeks indicates a “sharp rise of profits for the first nine months of the year due, among other things, to the increase in interest rates and that the remuneration of deposits is still contained “. The sector, they added,” is in a very solid position in terms of solvency “and the previous analysis carried out by the Executive does not make you foresee Having a “significant impact” for the pledge given its “temporary nature as well as for its calibration and design”. Finally, in relation to competition, the Government understands that “the time horizon minimizes any distorting effect“.

Congress petition

Congress agreed in late September ask the ECB through the Bank of Spain non-binding opinion on the “tax” on banks, as anticipated by this newspaper. avoided so the European institution issued its own-initiative opinion, as you can too. The legal offices the monetary authority and the financial supervisor have analyzed it in recent weeks as a step preceding the government council approved your opinion, usually through a written procedure and without the need for a physical encounter.

Senior officials of the monetary and financial supervisory authority, in any case, they had already made it clear from the first moment that its establishment traditionally he objected to this kind of taxes because he understands it reduce the flow of credit, make loans more expensive to companies and families, e lower solvency of entities. This is how they felt so much Pablo Hernandez de Cos (Governor of the Bank of Spain and, as such, member of the Governing Council of the ECB) e Luis de Guindos (Vice-President of the ECB).

exceptional and temporary

The president of the government, Pedro Sanchezgave it a shot last July by surprisingly announcing a tax “exceptional and temporary” to the banking and energy sector. Despite being an initiative of the Executive, it was presented as a bill by the PSOE and United We Can to Congress to speed up its approval. The two sides have proposed to tax 1.2% of the sales of energy companies that have a turnover of more than 1,000 million euros, as well as 4.8% of the interest margin plus commissions of banks with more than 800 million of income. , with what they calculate it could be raise about 7,000 million euros in the next two years.

S entity financial firms have come out in a storm to publicly express theirs opposition at the rate, which to avoid legal pitfalls was raised as a ‘property arrangement of a public nature of a non-fiscal nature “. Depending on the sector, will reduce his ability to give credits worthy of 50 billion euroswho will do the the economy stops growing of approximately 3,900 million euros in the next two years (approximately 0.32% of GDP with data from 2021) and that stop being created in the meantime 25,000 and 35,000 jobs (with which the number of employees will lose growth of between 0.12% and 0.17%, with EPA data at the end of June).

changes

The banks, on the other hand, assumed from the beginning how practically impossible that the ‘tax’ don’t go ondespite trying PP or Vox they will take it to Constitutional Court. Therefore, they tried influence in some parliamentary groups so that the tax that is finally approved is that least harmful as possible. Therefore, they proposed that intra-group transactions are not taken into account in the tax, that their payment is deductible for tax purposes and that they are allowed to pass on their costs to customers.

Los large banks with international business they want them too external activity with connections in Spain be exempt. Furthermore, some entities have proposed that the tax be distributed among several banks, given that there are now exempt the smallest and the foreign operating in Spain through branches, such as ING and BNP Paribas. It is, yes, an approach that the big banks have defended a naive individualas the employers’ associations AEB and CECA also represent the entities currently excluded from payment.

Appeal in court

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The sector, in any case, thinks about it unconstitutional in its current design. And pending the changes that the bill may undergo during the parliamentary process, the most widespread idea in the banking sector today is challenge it in court. It could be, yes, a court battle very long, of up to eight yearsaccording to financial sources.

The most likely today is that banks will have to wait for the Treasury to pass the first early settlement of the ‘tax’ in February next year to take the matter to court. Then the entities will be able to challenge it, alleging that it is contrary to the Magna Carta and asking the judges to refer it to the Constitutional Court. If the judge accepts it and admits it to be drawn up by the Constitutional Court, that court “would take six to eight years to resolve,” the sources emphasize.