Regulatory restrictions still in place at Fimbank

That the banking sector is under severe pressure in Malta is no surprise. In our multi part feature being published here on Malta Winds, we shall be looking at most of the banks currently in operation and how these are facing tough times. With reference to FimBank it seems that the waters are still rather muddy with restrictions still being in force as applied by the MFSA.

After reporting yesterday that the MFSA found that the bank’s structure was not compliant with its operations further research revealed that a statement was published on the 29th of March this year stating the following:


On 29th March 2016, the Malta Financial Services Authority (the MFSA or the Authority) decided to apply a number of restrictions on FIMBank plc through applying limitations on the expansion and further investment in its network of subsidiary and associated entities, in terms of the powers granted to the Authority under article 17E(1)and (2) of the Banking Act and sub-regulation 9(e) of the Banking Act (Supervisory Review) Regulations (subsidiary legislation 371.16).

Following an on-site inspection carried out during March and April 2015, on the basis of an accumulation of findings, the MFSA has determined that the governance arrangements, processes and mechanisms in place at the time of the inspection were not considered to be comprehensive to the nature, scale and complexity of the credit institution’s activities. Therefore, the requirements of article 17(B)(1) and 17(B)(2) of the Banking Act (Cap. 371) were not met.

Mitigating Factors

On the basis of a thorough assessment of the developments that have taken place subsequent to the conclusion of the on-site inspection, the Authority considers that significant progress has been registered by the FIMBank plc to remediate identified shortcomings. Accordingly, the Authority specifies that certain mitigating factors, particularly the positive stance taken by the Bank’s Board of Directors through inter alia the changes in senior management structures, the sustained level of shareholder support, the fact that actions to implement the corrective measures as requested by the Inspectors have been taken (or are in the process of being undertaken) and the collaborative stance adopted by the Bank’s Board of Directors and executive management, had a material bearing on its assessment and consideration to impose this regulatory action.

This notice is being published in terms of the powers vested in the MFSA under the Malta Financial Services Authority Act (Cap. 330).”

Incredibly, this highly important statement was not reported in the local media. And although it appears that the bank has made progress in identifying certain shortcomings, the MFSA still felt it was necessary to impose certain restrictions on the bank. It remains to be seen whether the financial results of the bank for 2015 (which are to be published shortly) will include any substantial difference to the USD 51 million loss posted in 2015.