News regarding the introduction of new taxes in Romania, as well as a special tax for Romanian banks, a solution similar to Italy and Hungary, has put the companies under pressure in Romania. At the same time, the discussion about the introduction of a 0.2% total assets tax for Slovenian banks also affected Slovenian listed banks.
Starting off with Romania, according to the Romanian Minister of Finance, there are discussions about the introduction of a 1% turnover tax for large companies, if the 16% tax amounts to less than 1% of the turnover. This is presented as a minimum tax that has to be paid in Romania. What is interesting about this tax is that it would be levied even if companies report a loss.
BET constituents impact (% change vs. closing price on Friday, YTD* % change)
Source: Bloomberg, InterCapital Research
*Hidroelectrica price change as of listing on BVB
Furthermore, discussions about the bank windfall tax are also being made, with a model similar to the one from Italy, where a 40% special tax was introduced, or Hungary and other member states that imposed extra windfall taxes on banks. As a result of both of these announcements, most of the BET constituents recorded decreases in share price yesterday, with MedLife declining the most, by 5%, followed by BRD at 2.7%, Banca Transilvania at 2.4%, BVB at 2.3%, and Aquila at 2%. The BET index itself declined by 1%. As a comparison, we also provided the YTD change (excl. Hidroelectrica), and as we can see, the majority of the companies actually recorded increases in share price, some of them significant.
Moving on to Slovenia, according to the media reports, Slovenia is to introduce a new tax on the total assets of banks, which will be introduced within the framework of the law on reconstruction and development. Even though nothing is yet official, the Slovenian Prime Minister commented that he expects the tax will amount to 0.2% of the total assets of the Slovenian banks, which stood at app. EUR 50bn, meaning that the tax will levy app. EUR 100m. The initial govt. proposal was for the tax to amount to 1-2% of the total assets, while the banks offered 0.1%.
As we mentioned, there is no draft for the law yet, and it would still have to pass the government and parliamentary procedure. However, if passed, the law would be in effect for five years. After this news broke out, the largest effect would of course be taken by NLB Ljubljana as well as N banka Ljubljana, and not the Group. According to the latest H1 2023 results, NLB Ljubljana’s assets stood at EUR 14.68bn, while N Banka’s assets stood at EUR 1.09bn. Taken together, this represents app. 30.7% of the total banking assets in Slovenia. As such, if the 0.2% tax is passed, it would mean that NLB would have to pay EUR 31.5m at the current asset levels.
The impact of the 0.2% tax on the Slovenian banks1 2
Source: Companies data, InterCapital Research
1 NKBM and SKB are consolidated under OTP
2 Data based on the latest available reports
In the coming period, according to our estimates, by the end of 2023, the total assets should amount to EUR 16.3bn, by the end of 2024 to EUR 17bn, by the end of 2025 EUR 17.8bn, and by the end of 2026, to EUR 18.7bn. if we were to apply the 0.2% tax on these estimates, it would mean that NLB would pay EUR 32.6m of tax in 2023, EUR 34m in 2024, EUR 35.6m in 2025, and EUR 37.4m in 2026.
The impact of 0.2% tax on NLB* (2023 – 2026, EURm)
Source: InterCapital Research estimates
Finally, looking at the impact on the market, NLB’s share price declined by almost 2.6%, closing at EUR 75.60 yesterday.
