The worse stock market valuation of European banks compared to the US is due to the lower growth of the economy, but also uncertainties such as taxes. The diagnosis was made today by the vice president of the European Central Bank (ECB), Luis de Guindos, during the ABC and Deloitte financial conferences. “I think it has nothing to do with regulation. It has to do with the fact that in the United States growth is higher than in Europe and the markets discount that. Also because in Europe there is no real Banking Union and then there are other issues and uncertainties like taxes on profits,” he said.
When asked specifically about the tax that applies to Spanish banks and that the Government wants to extend, he recalled that the ECB’s position is “very clear”: “Taxes should not affect solvency or the granting of credit,” he indicated. .
He avoided going into a specific assessment of the reformulation of the Spanish rate with a “I don’t know what is going to happen”, but clarified that if there is a modification it will be analyzed by the ECB under the same criteria. “We will analyze it and always with the two considerations that are the guidelines,” he noted.
Guindos specified, however, that different countries have adopted some type of tax and “not all are identical”, considering that in Italy a figure has been adopted with a “more appropriate approach” to the ECB’s approach since it allows entities to reduce taxation, allocating funds to strengthen its solvency.
In more economic matters and when questioned about Donald Trump’s victory in the United States, he warned about the risk of declaring a trade war that would end up “negatively affecting global growth and also affecting inflation” as happened in the 1930s.
“When you raise tariffs, the one opposite can react and you can get into a spiral that is not at all positive,” he said, being in any case cautious while waiting to see how the expected protectionist measures may or may not materialize.
Guindos pointed out two other factors to follow after the Republicans’ victory: their tax and immigration policies. He pointed out that the markets could react if the announced expansionary policy is applied given that the United States has a deficit of 6.5% and a public debt-to-GDP ratio close to 100%.
“If this expansionary policy is applied, the markets will immediately react and raise interest rates,” and “it will end up affecting the valuation of all assets sooner or later,” he said. Thirdly, he warned about the treatment of immigration in a country that, as in Spain, is a group that contributes with its activity and employment to economic growth.
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