Italy Offers Banks Get-Out Clause on Divisive Windfall Tax (2)

The Italian government modified a controversial windfall tax on banks, giving lenders an option to avoid paying if they set aside additional capital reserves.

The changes, which are widely expected to be approved by parliament and become binding this week, signal a compromise from the right-wing government of Giorgia Meloni following a slump in Italian bank stocks and criticism from the European Central Bank.

The levy, which took aim at profits pouring in from higher interest rates, also caused a split in the ruling coalition, drawing opposition from junior partner Forza Italia.

The impact of the change is ...