The president of the Italian Banking Association (Abi) Antonio Patuelli commented on the contribution that the Government has asked for from banks and insurance companies for the Budget. Patuelli recalled that credit institutions are already moving with many social initiatives, especially in case of emergencies.
He also underlined that the taxation on banks’ gross revenues is already very high, more than 50%. He then underlined that the low spread has no particular effects on banks and highlighted the role of the deterioration of German bonds in lowering the metric.
Patuelli on the Maneuver
The president of ABI spoke at Tuttosoldi, an event organized by the newspaper The Pressand responded indirectly to the statements of the Minister of Infrastructure and Transport Matteo Salvini, who has often indicated banks as a source from which to draw to increase the Government’s economic availability for the financial maneuver. Patuelli stated:
I do not participate in the electoral campaign or in the political controversies over the financial maneuver. We are in a market situation. Banks also often act in the face of emergencies, for example climatic ones, earthquakes, floods, which unfortunately are continuous in Italy and in all these cases they implement initiatives of a social nature and impact exclusively on their own economic accounts. And then we have a tomorrow that offers no certainties.
Patuelli then underlined how all the banking crises, except that of Monte dei Paschi di Siena, were faced with resources made available by the banks themselves.
Bank taxes “Over 50%”
Going into detail, the president of the ABI then invited us to look not at the gross revenues (therefore at the money that enters the banks’ coffers before subtracting any type of expense or tax) but at the net profits (what remains of the revenues after expenses and taxes), declaring
Gross revenues should not be confused with net profits. Banks already pay IRES at 24%, IRAP with an additional 0.75% and further taxes on dividends which bring the overall taxation on gross incomes above 50%.
However, Patuelli then reassured them that the banks will not pass on the cost of the contribution requested of them by the Government to their customers: “There is strong control and significant competition between institutions, which prevents similar behaviour” he declared, underlining that any increase in costs on current accounts or credit cards would expose an institution, which would risk losing customers to banks that would not apply it.
Interest rates and the spread
Patuelli then concluded his speech by underlining that the banks’ recent revenues come after almost ten years of zero interest rates, which therefore meant it was difficult for credit institutions to make a profit. He then underlined that the spread is not a “gift to the banks”:
Banks work on rates in absolute terms. The reduction in the Italian spread is linked to the management of post-pandemic public spending and the deterioration of the German accounts.
He then added that Italian BTPs currently yield 3.41%, while German Bunds yield 2.62%. Part of the reduction in the spread therefore also resulted from the difficulties of the German economy and the consequent deterioration of the country’s debt. The spread, in fact, calculates the difference between the returns of two countries. It can decrease if the interest on the government debt with the highest yields falls, but also if, on the contrary, the interest on the one with the lowest yields rises.
