Spain's ruling parties propose to widen tax to foreign banks' units

MADRID (Reuters) - Spain's leftist ruling coalition has submitted amendments to its banking tax proposal that would allow the government to impose levies on the local units of foreign lenders supervised by the European Central Bank regardless of their revenue.

The banking tax includes a 4.8% charge on banks' net interest income and net commissions above a threshold of 800 million euros in the original version. That left out smaller Spanish lenders and the units of foreign banks in Spain.

In their joint amendment proposal, the coalition parties said on Thursday that "the tax must be paid by institutions subject to direct supervision by the ECB, including branches established in Spain by foreign credit institutions, regardless of the sum of their interest and commission income".

The amendment proposal comes after the ECB warned last week in a non-binding opinion that Spain's banking tax proposal could damage lenders' capital and also distort market competition and impair a level playing field.

The government introduced the original bill to create the temporary levy on banks in July, and it is still being debated in parliament. It aims to raise 3 billion euros by 2024.

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo and Belén Carreño; editing by Andrei Khalip and Bill Berkrot)