Banks’ solvency key to ECB opinion on proposed Spanish tax

By Jesús Aguado

MADRID (Reuters) – The European Central Bank could issue a non-binding opinion on the proposed tax on Spanish banks in the coming days or weeks after assessing its impact on the sector’s solvency, senior ECB central bankers said on Monday.

In July, Spain’s leftist ruling coalition introduced a bill in parliament to create a temporary levy on banks aimed at raising 3 billion euros ($2.93 billion) by 2024.

ECB Vice-President Luis de Guindos said the central bank had created a team of experts from areas such as supervision, financial stability, economy and monetary policy to form an opinion.

“In the coming days or weeks we could see a non-binding opinion,” De Guindos told a financial event.

Though De Guindos on Monday gave no indication of which way the opinion from the ECB experts would lean, he has recently said that a banking levy could have negative effects in the sector and risks damaging its solvency.

Bank of Spain Governor Pablo Hernandez de Cos told Spanish lawmakers at a separate event that the ECB’s assessment would focus on two questions: to what extent it affects the monetary policy transmission mechanism and to what extent it could have an impact on the solvency of the banking sector.

De Cos, who is also a member of the ECB’s governing council, said that in similar cases some negative aspects had been identified regarding solvency.

In July, De Cos said it was not easy to establish a tax that did not end up affecting credit. The tax would include a 4.8% charge on banks’ net interest income and net commissions.

Top executives at Spanish lenders, including Santander (BME:) and BBVA (BME:), have said that the proposed tax would directly hit banks’ profitability and also distort competition since the levy targets banks with a turnover greater than 800 million euros.

($1 = 1.0255 euros)

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