Proposed Dutch Tax Increases for Banks Will Lead to Higher Risk Premiums; Impact on Earnings Minimal

The lower house of the Dutch parliament approved proposals for higher bank taxes and measures to eliminate the difference between withholding taxes on dividends and share buybacks. We estimate that the increase in Dutch bank taxes implies a 2% hit to our 2023 earnings estimates for ABN Amro and ING. The tax treatment of withholding taxes differs according to investors' residency and tax status and should not directly influence our valuation for ABN Amro and ING. However, we are concerned that continued European regulatory and government intervention will lead to higher risk premiums and lower valuations for banks. We recently had the opportunity to speak to several U.S. institutional investors and the risk of increased government/regulatory intervention in European banks was a topic that came up in all our discussions. The Dutch proposals follow windfall taxes on Italian and Spanish banks and the pandemic-related dividend distribution ban.