Bank profits will suffer from increase in levy

An increase in the bank levy in Slovakia will affect the profitability of the entire banking sector, Slovakia's central bank (NBS) warned on Tuesday. The bank's statement was issued in response to news that Finance Minister Ladislav Kamenický (Smer-SD) would submit a proposal at Wednesday's (November 6) Cabinet session to double the special levy on selected financial institutions. If passed the measure would take effect as of next year, and according to the ministry would bring an additional €144 million of funds into the state's finances. According to the central bank, while the current levy of 0.2 percent made up some 16 percent of banks' profits in 2018, an increased levy of 0.4 percent would equal as much as 33 percent. If profits were to fall in a crisis situation this proportion could be even higher - all of which could have an impact on stability in the Slovak banking sector and thus on the willingness of parent banks to invest in it. The Slovak Banking Association has also criticised the proposed move, stating that even the current 0.2 percent levy already amounts to a form of double taxation.