* Levy to impact mainly top British, German, Swiss banks
* Could strip more than 10 percent of bank earnings
* Analysts say levy could slow or stop bank sector recovery
By Ben Berkowitz
AMSTERDAM, Jan 15 A 'crisis tax' proposed by the
Obama administration would cut substantially into bank earnings
across Europe and could sidetrack the sector's recovery,
analysts and industry officials said on Friday.
While there is little clarity over the practical effect of
the levy, many questioned its fairness given that the European
banks it would affect did not get bailouts in the United States
and lack many of the guarantees their U.S. competitors received.
Under the proposal made on Thursday, financial institutions
with balance sheets above $50 billion would be assessed a fee
equal to 0.15 percent of certain assets. About 15 international
firms fall under that umbrella. [ID:nN13152862]
Europe's three biggest economies were quick to distance
themselves from the proposal. German Chancellor Angela Merkel
said she favoured a financial transaction tax, Britain said the
problems in the United States were uniquely its own, and France
said a tax on bonuses was the most efficient response for it.
Deutsche Bank (DBKGn.DE) was named as likely to be one of
the European banks most affected, given its U.S. exposure.
"The tax will fully hit annual profits," Merck Finck analyst
Konrad Becker said, adding he calculated Germany's largest bank
had to brace for a tax of more than $550 million.
Morgan Stanley estimated the fee could eat up 4 percent of
Deutsche Bank's 2012 earnings per share, 3 percent for British
bank Barclays (BARC.L), and 2-3 percent for Swiss banks Credit
Suisse CSGN.VX and UBS UBSN.VX.
President Barack Obama's stated aim was to ensure the U.S.
taxpayer does not make a loss on the $700 billion Troubled Asset
Relief Program (TARP) with a "Financial Crisis Responsibility
Fee" that would be in place for at least 10 years.
While the long-term fallout could be acute, investors
reacted calmly with major European banks stocks down 1.0-1.3
percent in a flat broader market .FTEU3 at 1330 GMT.
"While market (share) price action suggests some doubt over
its successful introduction, we are concerned it could weigh on
not just the recovery of the banks sector (and particularly
investment banks) but also of the economy," Nomura analysts
The Japanese brokerage estimated the fee could cost large
European commercial banks up to 11 percent of normalised
earnings and up to 20 percent for investment banks.
For BREAKVINGVIEWS columns on the crisis tax, click here:
INVESTMENT BANKS TARGETED
In total, Morgan Stanley forecast an EPS hit of 3-6 percent
for its U.S. and European bank coverage group from 2010-12.
Evolution Securities put the impact in dollar terms,
forecasting a cost of about $1.7 billion just for the four
biggest European payers.
Industry sources said there was disgruntlement at British
lenders, which like most non-U.S. institutions did not benefit
from TARP but will still have to pay up. Others, however, said
banks were simply being made to pay for systemic support,
something most have acknowledged they need to do.
British bank HSBC (HSBA.L) said it was studying the
proposals but a raft of other major European banks would not
comment, including BNP Paribas (BNPP.PA), the French bank most
exposed to the United States, and Spanish banks BBVA (BBVA.MC)
and Santander (SAN.MC).
There were doubts about how effective Obama's new tax would
be if other countries do not take part, particularly since TARP
losses are seen as largely a U.S. problem.
"I do not think there is necessarily a logical premise to
support the assumption that you will get a readacross to the UK
or Europe," said analyst Ian Gordan at Exane BNP Paribas.
Germany's finance ministry said Friday it was a priority to
find an international solution on bank taxes, while French
economy minister Christine Lagarde said bonus taxes were more
effective than the American solution.
The British Treasury said the United States had problems
which were uniquely its own and required a different plan.
"The U.S. government expects to lose more than $100 billion
from its intervention to deal with troubled assets. It is right
they take steps to recoup the cost of their interventions,
taking account of their own domestic financial and political
situation," A British Treasury spokesman said.
(Additional reporting by Reuters reporters across Europe;
Editing by Dan Lalor)