Italy's Surprise 40% Windfall Tax Sends Banks Reeling

Italy has surprised its banks by implementing a one-off 40 percent tax on profits generated from higher interest rates, criticizing lenders for not rewarding deposits. The move follows record profits for banks due to soaring loan costs. Other countries, such as Spain and Hungary, have already imposed windfall taxes on the sector. European bank shares plummeted in response to the news, with Italian banks experiencing the largest losses. The tax is expected to impact Italian banks' earnings in 2023, potentially wiping out up to 12 percent.