ECB Warns Spain New Tax Can Hurt Some Banks, Distort Market (1)

The European Central Bank warned that Spain’s push to raise taxes on banks may end up hurting lenders not reporting profits from higher borrowing costs.

The planned levy doesn’t consider the full business cycle of banks and the rising cost of credit risk, the ECB said in a non-binding opinion. The tax could further hit banks that are already loss-making and distort competition, the supervisor said.

“As a result of the general application of the temporary levy, credit institutions that are not necessarily benefiting from current market conditions could become less able to absorb the potential downside risks of an ...