2018 has not been a good year for Maltese banks and situation remains ‘worrying’

‘It is becoming impossible to open local bank accounts for foreign companies’ – sources

The situation regarding banking in Malta has taken a rather worrying turn of late. Several sources who operate within the industry of financial services and who spoke to this news portal have indicated that it is becoming next to impossible to open a bank account for a foreign client in Malta.

Banks are in a perilous state at the moment, with BOV faced with a number of lawsuits, Nemea that was stripped of its license, Pilatus which is being forced to shut down, Satabank being unable to operate, Ferratumbank slapped with a big fine, HSBC no longer an active participant in the market and now Sparkasse under the spotlight – the local community are faced with a changing environment where banks are no longer adventurous and too scared to lose their license.

This came after years of excess liquidity that built up in the system and now banks want to re-adjust but operate risk-free which in reality is difficult to comply with the 4th AML directive at such short notice. Furthermore, banks are encouraged to do STRs and they are being perceived by the general public as becoming the partners of the government and revenue authorities instead of serving their customers.

Sources who spoke to this portal said that their clients are angry and resentful but there is nowhere to go, so service providers that offer services to foreign clients are now working with e-money institutions abroad because there are very limited solutions locally.

Another local service provider who spoke on the condition of anonymity said that the situation remained precarious and that the authorities were simply turning the screw now to cover up for the previous failings in the past.

“In my opinion if you are a bank, there is no point in overreacting because if you have a license eventually the MFSA and the FIAU will come and conduct visits and slap the bank with some sort of fine, so that it looks that the authorities are doing their work now, to cover up for their own misdeeds (of failing to supervise the banks years ago). Now the authorities are showing up with their teeth and scaring potential investors – the most difficult place to open a bank would be in Malta as the licensing authorities will be super extra careful and be extremely demanding and bureaucratic for a new potential license holder”.

Another source from the financial services industry who also spoke on condition of anonymity described the situation as a perilous one with banks caught up in all sorts of shenanigans.

“It has not been a good year for Maltese banks. BOV has been caught in a huge trust related incident which might carry substantial financial costs if a court case in Italy goes against it. Now it is Sparkasse occupying the headlines and suspected of very expensive negligence or whatever may result. Welcome Maduro – your money is safe here it seems – or was – thanks to US investigators, as usual.  We have seen this before with the highly unlovable Pilatus Bank. We have also read about the Nemea Bank closure and the apparent intervention by the ECB apparently for the first time.  Welcome to Europe dear Malta.  And we have read that Pilatus Bank and its shareholders are screeching and threatening to have its operating licence back.  Apparently, we may be seeing the first ever civil case for damages initiated by a bank owner against its own regulator, the inglorious MFSA, which has not enjoyed a calm and serene year either.  Is it true that the MFSA shall soon see their office shifted elsewhere? Is this too a state secret?  And then we have Portmann and more Venezuelan connections – how can one keep up?  So many scandals or would-be scandals big or small. It will be worth watching this space.  Is this what our self-praising and self-admiring financial sector is all about.  Is the MFSA a paper tiger after all – thanks to years of reckless and ambiguous rule by its former “indispensable” boss who – as it happens, overstayed his welcome? Is this his true legacy?”, the source added.