Banka Slovenije commentary on taxation of banks’ total assets
Banka Slovenije has been examining the impact of the floods from the perspective of financial stability, and finds that the current data suggests that the impact is manageable. Looking over the medium term, the banks are operating in an economic environment that is favourable to them, and are enjoying high profits this year in particular. Monetary policy measures are a major factor in this performance: the increase in net interest income is being driven by rising interest rates, particularly on claims against the central bank, and a rise in interest rates on loans. Conversely the banks are adjusting their interest rates on deposits much more slowly.
With regard to the planned taxation of banks and savings banks, Banka Slovenije should clarify that government tax policy does not fall under its remit. The key aspect as far as we are concerned is that the measures put in place do not affect the stability of the banking system. Banka Slovenije is thus examining the government’s initial proposals in detail.
Here we should reiterate that any measures affecting the performance of banks and the stability of the financial system need to be assessed and evaluated in connection with other measures in the area of tax policy and to address the impact of the floods. In the assessment of any additional taxation, it is important to bear in mind that to ensure that their mission is pursued safely and effectively, banks must meet the regulatory requirements with regard to capital and risk management, which are designed to maintain the financial stability of the banking system.
At the same time it is also important for any assessment of the introduction of additional taxation to take account of aspects applying at the level of the Eurosystem as a whole, to which the ECB has also drawn attention. These include the impact on bank profitability, the banks’ ability to attract capital, lending capacity, their competitive position compared with banks from countries where there is no such taxation, and lending terms.