December 19, 2018 / 11:47 AM / in a month

UPDATE 1-Exposed Austrian banks hit by Romania tax plan

(Updates prices, adds quotes, details)

By Helen Reid

LONDON, Dec 19 (Reuters) - Shares in Austria’s Erste Bank and Raiffeisen Bank International sank on Wednesday after Romania announced plans to tax banking assets from 2019.

Erste Bank, which gets 8.4 percent of its revenues from Romania’s biggest bank Banca Comerciala Romana, saw its shares tumble as much as 10 percent, the worst STOXX 600 faller, before recouping some losses.

Raiffeisen Bank International, which has 6 percent of its assets in Romania according to an investor presentation in November, was last trading down 3.5 percent.

The proposed tax would also hit the earnings of French bank Societe Generale, KBW analysts said, estimating an impact of between two to seven percent on earnings per share.

“The dramatic poor performance (of bank stocks) this morning seems a little overdone,” said Tom Kinmonth, fixed income strategist at ABN Amro.

“A new tax would eventually have to be absorbed by the public and should help protect the banks’ margins in the future, although naturally in the short-term earnings will suffer,” he added.

Romania’s blue-chip stock index also fell to its lowest level in more than six months after the Social Democrat government announced new tax plans for banks and energy companies, as well as making private pension funds optional.

Shares in Societe Generale were up 1 percent, spared from the sell-off, while UniCredit, which Kinmonth said also has a small exposure to Romania, was rising after news Italy’s government struck a budget deal with the European Commission. (Reporting by Helen Reid, Additional reporting by Karin Strohecker in London and Kirsti Knolle in Vienna, editing by Julien Ponthus and Alexander Smith)

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