The second biggest party in Sweden’s parliament has effectively blocked a proposal by the Social Democrats to impose a temporary tax on the profits of the country’s banks.
A spokesperson for the nationalist Sweden Democrats, which currently support the coalition government led by Ulf Kristersson, said the plans for a levy on lenders were not part of “the budget bill we were involved in and negotiated.”
Shares of the country’s three main banks advanced in Stockholm. Swedbank AB and SEB AB gained as much as 1.4% and 1.2%, respectively, having been little changed in early morning trading. Svenska Handelsbanken AB rose as much as 0.6%, reversing an earlier decline.
Read More: Swedish Bank Shares Fall as Opposition Party Pushes Windfall Tax
The bank tax proposal would have required cross-party support in Sweden’s parliament to stand a chance of being passed into law. For the Sweden Democrats to back the plan, the party would effectively have to sever ties with the right-wing coalition administration it promised to support at last year’s general election.
Still, the proposals come as the calls for measures to curb bank profits grow louder across much of Europe, including in the Baltic region where Swedish lenders dominate much of the market. The political pressure stems from record profits in the banking industry as deposit rates have failed to keep pace with soaring lending margins.
