Slovenia plans to slap a five-year tax on bank profits to help fund flood reconstruction following the country’s worst natural disaster in at least three decades.
(Bloomberg) — Slovenia plans to slap a five-year tax on bank profits to help fund flood reconstruction following the country’s worst natural disaster in at least three decades.
The government announced new legislation to impose the levy amounting to 0.2% of banks’ total assets over the next half decade. It assesses the cost to rebuild at €7 billion ($7.5 billion). The European Union has already earmarked around €2 billion for the effort, while authorities are also rethinking this year’s budget to free up €520 million more.
“The banking sector will make a significant contribution to the reconstruction” after a profit surge in 2022 that continued this year, the Finance Ministry said in an email Tuesday.
Read more: Damage from Record Slovenia Floods to Hit Billions of Euros
NLB Nova Ljubljanska Banka slumped 1.8% in Ljubljana today, a top lender on the Slovenian market, along with local units of Banka Intesa Sanpaolo and UniCredit Bank.
Some lenders have already voluntarily offered additional support to clients affected by the floods, which will be taken into account in the new law, the ministry said.
Still, “rising lending rates and the maintenance of low deposit rates, while at the same time the continuation of low net impairments and provisions” have boosted banks’ profitability well above the multi-year average, the government said.
–With assistance from Misha Savic.
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