The bank experienced a great shake-up on the stock market this Tuesday after the announcement by the President of the Government, Pedro Sánchez, of a new extraordinary and temporary tax with which he hopes to raise 3,000 million in the next two years, which will be applied to “the large financial entities that have already begun to benefit from the rise in interest rates”.
A week after that rise by the European Central Bank (ECB) and with the doubts that already affect all listed firms about the slowdown or the looming recession, the banks sank. More taxes means lower profits and fewer dividends to be distributed to shareholders, which reduces the value of the entities, which is precisely what the share price reflects.
In a matter of a few minutes, prices fell to levels not seen in a long time. Given the initial confusion, there was a lack of information – it would not be much more specific before the closing – and investors stampeded. Blood affected entities with a higher proportion of business in Spain more. Banc Sabadell fell almost 12%, followed by Bankinter (11%) and CaixaBank (10%), with Santander and BBVA limiting the damages at that time to an equally harsh 6%.
The bank, meanwhile, was silent. Only at the close of the market, did he speak through the mouth of his two employers, the AEB and the CECA, to say that they did not know the information from the Government about an announcement "that reflects the legal insecurity that operates in a sector so important for the economy and the society". The note adds that "the eventual (sic) rise in rates by the ECB does not necessarily imply an improvement in profitability."
After recalling the role of banking during the pandemic, the AEB assures in its note that “a measure that affects only one sector goes against the principle of [tax] equality and distorts the market.” For its part, the CECA recalls in its statement that the rate hike implies the normalization of monetary policy. And he adds: "We cannot anticipate its impact on the balance sheets of entities of a measure that does not contribute to harmonizing tax regimes in Europe."
For their part, the CEOE and Cepyme employers criticized that the government's measures, which come a few days after requesting an income pact again, have been taken outside the social newspaper. "In a scenario of rising interest rates, the creation of new a la carte taxes is an added barrier for Spanish companies on the long-awaited path to recovery," they said in a statement.
Hours earlier, in Congress, the Minister of Finance and Public Administration, María Jesús Montero, stated that she thought it was "fair that banks and energy companies be asked to make an added effort" so that they contribute more in these times of crisis. high inflation. With regard to financial entities, her argument was that "they are already benefiting from the rate hike", which is absolutely logical, at least, with regard to the credit portfolio linked to the Euribor, such as the variable mortgages.
Together with the bank, Sánchez took advantage of the debate on the state of the nation to confirm his intention to raise the taxation of the profits of energy companies. In his case, with 4,000 million in the next two years. As the matter was already known and was discounted in the prices, the impact on the day was almost anecdotal.
The only energy company that fell sharply was Repsol, which lost 5.7% in a day in which the price of oil suffered a sharp drop. The price of a barrel of Brent crude, a reference for Europe, was below the threshold of 100 dollars shortly before closing due to growing fears that Europe would suffer a recession, which would put a brake on demand. It traded at $99.5, slightly above pre-Ukraine-invasion levels.
The positive part is that, even due to the weakness of future demand, companies will have lower energy costs. And that led to a very moderate rise in the stock markets, where the fear of recession is still present... This Tuesday it was made public that the confidence of German investors deteriorated significantly during June, according to the ZEW index and the data show that the Investor pessimism is slightly higher than that observed at the start of the pandemic in March 2020. Thus, the Paris and Frankfurt stock markets rose 0.8% and 0.6%, respectively, while the Eurostoxx posted a 0.4% and London, 0.2%.
