UBS: Italian Bank Tax - A New Twist In The Tale; An Asset Cap Would Limit The Negative Impact

This morning has seen UBS note that “the Italian Ministry of Finance has issued a statement flagging that the new banking tax on extra profits introduced yesterday will be in line with the European regulation related to banks' windfall profits tax. If fully confirmed without additional changes, this would imply the final impact for banks would be materially less than previously anticipated, given the 0.1% asset cap would become a (lower) binding constraint for all entities compared to NII growth considerations.”

• “If this new approach is confirmed, we still see UCG’s share price reaction as relatively harsh in absolute and relative terms.”
• “We have Buy ratings on all Italian banks except Mediobanca. Our positive view is predicated on much improved earnings momentum due to the banks' significant gearing to higher ECB rates, lack of negative asset quality developments, strong capital positions opening the door to a period of structurally sound capital returns. Despite strong performance YTD, we think valuations remain attractive.”