Local banks encountering difficulties in continuing correspondent relationships with US banks

Local banks are encountering considerable difficulties in continuing their relationships with US correspondent banks, this portal can reveal.

Yesterday, Malta Today reported that Satabank, a recently established bank only inaugurated last March had halted all transactions in US dollars until further notice. This was made through a letter sent to the clients where it was unceremoniously stated that clients would not be able to conduct transactions in US dollars anymore.

Informed sources who spoke on condition of anonymity told this portal that Bank of Valletta was having serious issues in continuing relationships with correspondent US banks. In fact, the recent visit by Prime Minister Joseph Muscat to the United States accompanied by MFSA Chairman Joe Bannister and Central Bank Deputy Governor Sandro Demarco was in relation to the issue prevalent at BOV.

Other sources told this portal that Deutsche Bank US recently hit by an US 2.5 billion fine for compliance irregularities will not continue dealing with Maltese banks due to the high costs involved to maintain such relationships. Bank of Valletta’s primary correspondent bank in the US was actually Deutsche Bank and it is still unknown if this relationship is in jeopardy.

Maltawinds contacted other locally based banks who operate in US dollars and these have not reported any problems in their dealings with US banks so far. It remains to be seen whether the election of President Donald Trump will prove to have an effect on Maltese banks with tightening of regulations and general suspicion with everything European in an increasingly insular United States of America.