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Date Published: 23/11/2022

ARCHIVED - Big banks and electric companies in Spain cash in with 30 per cent increase in profits

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The Spanish government plans to levy taxes against banks and electricity companies benefitting from the financial crisis

<span style='color:#780948'>ARCHIVED</span> - Big banks and electric companies in Spain cash in with 30 per cent increase in profits

While countless people across Spain are struggling to make ends meet, prompting the government to introduce new mortgage crisis measures to help those scraping by on lower incomes, the big banks and electric companies are raking it in, increasing their profits by 29.9% in September compared to the same time last year.

The six largest financial institutions in Spain – CaixaBank, Banco Santander, BBVA, Banco Sabadell, Bankinter and Unicaja – reported an incredible 16 billion euros in profit, while the energy companies (Repsol, Endesa, Naturgy, Cepsa and Iberdrola) reported profits of 9.5 billion in the first nine months of the year. That’s an increase of 52% on 2021.

With a possible recession on the horizon and inflation reaching never-before-seen figures this summer, the average consumer is feeling the pinch when it comes to energy costs, fuel, even groceries. But the big businesses are cashing in on the unstable market created by the war in Ukraine.

“Business this year has been very positive. The costs of the raw material with which these companies work is triggered by the conflict and they have passed it on to consumers, so their income has multiplied,” explained Darío García, an analyst with XTB.

In the financial sphere, the rise in interest rates by central banks has made the traditional banking business far more profitable.

Acknowledging the unfairness of these businesses benefiting from the current economic situation, the Spanish government plans to levy taxes on banks and electric companies, in addition to creating a wealth tax to “deal with the crisis”.

With these measures, the Treasury hopes to collect 3 billion from the banks between 2022 and 2033.

The move has been met with criticism from the ECB which fears that taxes against banks could “distort competition” and ultimately make banking more expensive for the consumer.

Fedea (Foundation for Applied Economics Studies) has taken things a step further, claiming that the levies are “are highly questionable and these measures have a strong ideological charge and a clear electoral motivation.”

Image: Pixabay

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