Two banks on the horizon will alleviate banking problems for new economy

Two banks may open shop next year as the country experiences a growing disconnect between government’s economic strategy and established banks’ risk appetites.

The Malta Financial Services Authority is in the process of evaluating licence applications for five financial institutions, according to CEO Joseph Cuschieri.

“We have five licences under review, four of which are progressing well. I expect the process for at least two of these banks to be concluded by the second quarter of next year,” Cuschieri said.

Business operators have been complaining over the conservative banking practices of the major retail banks in Malta that have adopted de-risking strategies in the face of tougher anti-money laundering regulations.

Operators in new sectors of the economy the government is trying to attract, such as blockchain, crypto, gaming and aviation, are finding it difficult to bank in Malta. Foreign workers also complain of the length of time it takes them to open bank accounts with Maltese banks.

Cuschieri said banks have been facing tougher rules internationally, which can explain the lower risk appetite of large retail banks that are important to the economy.

According to European Central Bank rules, Malta has three banks considered to be systemically important – Bank of Valletta, HSBC and MeDirect (formerly, Mediterranean Bank). These are directly supervised by the ECB because of their importance to the economy.

“The solution is to have a wide array of banking institutions operating on the island with different risk appetites and the MFSA is currently reviewing the applications of five banks that primarily operate through online platforms,” Cuschieri said.

Coming hot on the bad experiences of Nemea, Pilatus Bank, and Satabank, all of which had their licences withdrawn, the MFSA has also tightened its due diligence processes.

“We are spending more money to seek intelligence from specialised foreign companies on applicants and we have also made it mandatory for licence holders to have in their shareholder structure a banking institution,” Cuschieri said.