Below is a right of reply received from Bank of Valletta, published in full, regarding maltawinds.com article dated 6 August “BOV’s de-risking scheme paves the way for the fall of Malta’s banking sector”
The article “BOV’s de-risking scheme paves the way for the fall of Malta’s banking sector” published by Maltawinds on 6 August is riddled with so many inaccuracies and non-sequitursthat one hardly knows where to begin. The tone verges on being alarmist, and may itself contribute to the weakening of the local banking sector which the article is lamenting. The following is not a sentence-by-sentence response, but will be limited to addressing the allegations made in respect of BOV.
The main allegation is that BOV is closing down a large number of customer accounts “without reason” and “inexplicably”.
No business would turn away customers without good reason. BOV is no exception. Why should a bank refuse business, unless for the very good reason that such business carries risks which the Bank is not comfortable with?
BOV has made it amply clear on a number of occasions – most recently on the publication of its half yearly results – that it is undergoing a two-year transformation programme. The aim is to make Malta’s largest bank more secure, less risky and therefore sustainable in the long term. As part of the programme, the Bank is “de-risking” a number of business lines, including the offering of deposit accounts. BOV must ensure that all funds which are paid into or out of the Bank are legitimate, i.e. that they are untainted by money laundering. For the same reason, the Bank must ensure that all its deposit accounts are held by customers which satisfy its due diligence criteria, which have a legitimate need to hold an account with a Maltese bank, and which fit within its risk appetite.
The accounts which are being closed pertain to customers which are either unwilling or unable to meet the Bank’s due diligence criteria (such as identification, proof of residence and source of wealth); or which have no economic ties to Malta; or whose business is deemed to carry excessive risk.
The article itself admits that “the banking sector in Malta has suffered over the last few years, with plenty of foreign banks opting to withdraw their services from Malta.” And this is exactly one reason why the main Maltese banks are undergoing, or have concluded, transformation programmes with the aim of lowering their risk profile. Correspondent banks are not prepared to do business with higher risk banks, especially in cases where the volume of business transacted is relatively low.
Nor is this situation unique to Malta. With anti-money laundering standards being raised around the globe, banks have responded by tightening controls, and are exiting accounts and businesses which no longer fit within their scaled-down risk appetites. News of international banks embarking on transformation programmes and closing down categories of customer accounts regularly hit the headlines.
Far from “paving the way for the fall of Malta’s banking sector”, BOV’s transformation programme lays the foundations for the Bank’s future as a strong, sustainable and profitable institution. The Bank is confident that it will also contribute to the enhancement of the Island’s financial stability, and to its standing as a safe and reputable financial services centre.
We would appreciate that you update your article accordingly.
Market Intelligence Unit