Spain Said Near Tax Asset Rules to Ease Banks’ Losses

Spain is considering passing rules that would allow banks to use deferred tax assets guaranteed by the government to compensate losses, according to two people familiar with the matter.

Under the proposals, a bank could use tax claims to help offset a year’s losses, said the people, who asked not to be identified because the information hasn’t been made public. The claims, which would be guaranteed by the government, also can be used should a lender be liquidated, they said.

Spanish banks have been pushing the government to take steps to shield them from the impact of new financial regulations known as Basel III that change the treatment of DTAs so that they mostly will have to be deducted from capital over time. The International Monetary Fund backs steps to convert bank DTAs into transferable tax claims on the government, while urging lenders to take further steps to boost capital like limiting dividends or by selling shares.

A spokesman for the Economy Ministry declined to comment. Economy Minister Luis de Guindos said on Nov. 26 that the Spanish cabinet would approve new rules on DTAs at a meeting today.

Banco Sabadell SA, Spain’s fifth-biggest bank, rose as much as 1.6 percent in Madrid trading. The share climbed 0.9 percent to 1.93 euros at 11:36 a.m. Bankia SA, the fourth-biggest lender, advanced 0.6 percent to 99 cents.

DTAs arise from carrying over losses and may be used by companies to reduce future tax expenses. Spanish banks have about 59 billion euros in DTAs generated in the country, according to the IMF.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE