BBVA and Caixabank explore legal action against proposed bank tax in Spain

Spanish banks BBVA and Caixabank are considering legal action in response to a proposed tax on banks in Spain. The tax, which would also affect large energy companies, is part of a government effort to raise €7 billion ($7 billion) by 2024 to fund measures to ease the cost of living for citizens. The proposal includes a 4.8% charge on banks’ net interest income and net commissions, as well as a 1.2% levy on large energy companies’ sales.

BBVA CEO Onur Genc said that the bank would explore all alternatives, including legal action, but would need to see the final details of the proposal first. Caixabank CEO Gonzalo Gortazar similarly said that the bank would keep all options on the table. The tax proposal has yet to be debated in parliament, where changes could be introduced.

The tax on banks is expected to yield €3 billion between 2023 and 2024. Gortazar estimated that the tax could have an impact on Caixabank of between €400 million to €450 million, while Genc expected a hit of around €250 million. The executives expressed concerns that the tax would hurt lending, economic growth, and competition, as smaller lenders would not be affected.

Higher borrowing costs have been a burden on banks for several years, and Gortazar and Genc argued that they should not be considered extraordinary gains. However, Spanish Prime Minister Pedro Sanchez suggested that the bankers’ complaints showed that the government was heading in the right direction.

Meanwhile, meetings between the Budget Ministry and banks and energy companies were also taking place on Friday to present the details of the levy. Bank of Spain Governor Pablo Hernandez de Cos had asked the ECB could issue a negative opinion on the tax for the week.

The proposed tax on banks and large energy companies is a controversial move by the Spanish government, which is seeking to ease cost of living pressures for citizens. However, it has faced criticism from the banking industry, which argues that the tax would hurt lending, economic growth, and competition. The threat of legal action by BBVA and Caixabank is a significant development and could have wider implications for the Spanish economy.

If the banks were to take legal action, it would be an unprecedented move that would set a new precedent for how governments could raise revenue from the financial sector. The outcome of any legal challenge is uncertain, and it is unclear how the Spanish government would respond. However, the threat of legal action highlights the tension between the government and the banking industry and underscores the challenges of balancing the needs of citizens with the interests of businesses.

The tax proposal will be debated in parliament, where changes could be introduced. It remains to be seen how the proposal will be received by lawmakers and the wider public. The tax on banks and energy companies is a contentious issue, and the outcome of the debate could have far-reaching implications for the Spanish economy and the financial sector.