Dutch Banks Slide as Lower House Backs Boost in Taxes on Lenders

Diederik Baazil and April Roach
·3 min read
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(Bloomberg) -- The Dutch parliament’s lower house approved raising taxes on banks and adding a levy on share buybacks, sending lenders’ shares lower.

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The proposal by the opposition Green Left and Labor parties, designed to aid low-income households ahead of an election on Nov. 22, unexpectedly passed late Thursday. It requires approval in the Senate and the Finance Ministry may advise against it after evaluating the measure’s feasibility. ABN Amro NV and ING Groep NV both declined by more than 5%.

The plan adds to investor concern that European banks face stiffer taxes as governments seek support for households squeezed by inflation. Italy has announced a windfall tax on bank profits and Hungary is considering raising taxes on banks to close a budget gap.

The Dutch motion was backed by a majority of lawmakers, who pledged to use some of the proceeds to raise the minimum wage. They estimated that adding a 15% tax to stock buybacks would raise €1.2 billion ($1.3 billion). The bank levy is projected to bring in an additional €350 million.

ING shares sank 6.4% in Amsterdam, the most since March. ABN Amro’s decline of as much as 5.3% pushed it to its lowest level since December.

Outgoing Prime Minister Mark Rutte’s cabinet collapsed in July amid infighting over migration policy. Rutte’s subsequent decision to leave politics has created a political vacuum in the Netherlands, with several possible contenders vying to take over from the country’ longest-serving premier.

What Bloomberg Intelligence Says:

“The Dutch parliament’s proposed tax on share buybacks — set at the 15% rate applied to dividends — and raised banking levy are the latest in a string of tax-grab policies as governments seek to claw back some of the earnings boost lenders have enjoyed from interest-rate hikes.”

- Philip Richards, BI banking analyst

The Finance Ministry will assess the proposal’s expected consequences before Oct. 4, when lawmakers will discuss the plan again, a spokesperson said by phone.

ING is following the developments while the proposal is under discussion, a spokesperson said. An ABN Amro spokesperson didn’t respond to a request for comment.

ING Impact

The impact of the planned bank-tax increase on ING will be around €140 million, Jefferies analysts wrote in an emailed note after meeting the bank’s chief financial officer, Tanate Phutrakul, in London on Friday. ING hasn’t assessed the impact of a proposed share-buyback tax yet, Phutrakul is cited as saying in the note.

The Dutch Banking Association blasted the proposal.

“It is naive to think that society will benefit from this increase in taxes,” the group’s head, Medy van der Laan, said in a statement. “Higher costs for businesses also lead to higher costs for consumers. The house is playing with fire.”

Rutte also expressed objections in parliament, telling lawmakers that the tax would make banks flee the Netherlands and ultimately drain revenue from government coffers.

“This would lead to the departure of banks, we are convinced, to Frankfurt, for example,” Rutte said.

--With assistance from Thyagaraju Adinarayan.

(Updates with shares in the sixth paragraph, Jefferies note in ninth paragraph.)

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