Meloni Toying With New Attempt to Get Cash From Italy Banks

(Bloomberg) -- Prime Minister Giorgia Meloni is looking at ways to raise more cash from the banking industry as she seeks to keep voters onside amid a squeeze on Italy’s public finances, according to people familiar with the matter. 

Officials from the prime minister’s team have had preliminary discussions with the Finance Ministry about how to raise more taxes from lenders and insurers that have benefitted from the surge in interest rates over the past couple of years, said the people who asked not to be named as the talks are confidential and no decisions have been made. 

The deliberations were first reported by Italian media, who said energy companies may also face additional levies. 

A government official denied that there are plans to levy a tax on the excess profits of some sectors of the economy, without elaborating further. 

Earlier on Friday, the Finance Ministry had declined to comment and instead pointed to remarks by its chief, Giancarlo Giorgetti, who last month highlighted that banks and insurers should contribute to support for families and companies. 

The situation is reminiscent of last summer, when a plan to levy a 40% tax on banks’ excess profits triggered a selloff in the Italian financial sector before being diluted dramatically. 

“The windfall tax unveiled in 2023 basically ended up with zero income for the government,” said Margherita Strazzari, an asset manager at Sempione SIM. Nevertheless, she added, “investors hate uncertainties.”

Italian bank stocks were trading broadly in line with their European peers on Friday, with the FTSE Italia all-share banks index down 4.5% compared with Europe’s banking benchmark, the STOXX 600 Banks Index, which declined 4.3%.

Meloni has been struggling to find enough money to keep all her promises to voters as the European Central Bank’s tighter monetary policy has crimped economic growth and Italy’s large public debt burden sucks up resources for interest payments. 

The Italian premier has pledged to cut taxes on wages and maintain subsidies for lower income families but she’s facing pressure to narrow Italy’s budget deficit from the European Union, after breaching the bloc’s fiscal rules. 

Meloni has repeatedly said that it’s not only down to the government to help poorer households and has singled out companies that have profited from a high-interest-rate environment.

The idea of a new levy on banks isn’t currently included in any draft legislation and the discussions are at a very early stage, said the people.

Legal Hurdles 

Meloni has been advised that a bank tax is likely to run into legal obstacles and officials are trying to find workarounds, the people added. That could mean increasing some already existing levies on broader sectors or working with banks on special loans for the poor, the young or elderly, they said.

“We see the rumors resembling last summer’s situation, with a potentially larger sector application and different components of the government having very different views on the measure,” Mediobanca analyst Andrea Filtri wrote in a note to clients on Friday. “An ad hoc tax could potentially scare foreign direct investment into the country and deter international investors on Italy as a whole.”

Under last year’s plan, lenders including Intesa Sanpaolo SpA, Unicredit SpA and Mediobanca SpA were ultimately offered the opportunity to increase their internal capital cushions rather than pay the new tax and most took that option. 

The prime minister has argued that Italy’s banks have benefitted disproportionately from high ECB rates, while being slow to share the windfall with customers in the form of higher deposit rates. That’s what’s prompted the latest discussions, the people said.

Meloni isn’t the first Italian leader to try to raise more money from companies. Former Premier Mario Draghi sought to raise billions of euros with levies on energy-company profits but eventually brought in just over €500 million ($545 million).

--With assistance from Chiara Albanese and Sonia Sirletti.

(Updates with government statement in fourth paragraph, shares in eighth)

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