Potential DTA clampdown threatens peripheral banks

April 10, 2015 4:53 PM

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LONDON, April 10 (IFR) - Southern European banks are facing the loss of more than 40bn of capital, after the European Commission launched an informal investigation into the deferred tax assets that many have been using to bolster their capital ratios.

The EU legislator is requesting information from Greece, Italy, Portugal and Spain on the guarantees they provide on banks' DTAs to determine whether they represent state aid, which is illegal under European law. Most other countries do not provide such guarantees.

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