Malta’s banking sector is ‘sound and robust’ with high solvency, profitability and liquidity, according to the Malta Central Bank Governor. Statistics show that the Maltese banking sector compares well to the European averages.
The Maltese banking sector comprises both domestically-oriented as well as international banks, the latter having limited links to the local economy. The Maltese banking system has strong solvency ratios and is well capitalized with an overall capital adequacy ratio exceeding 50 percent. This is well above the 8 percent minimum regulatory requirement stipulated in the Capital Requirement Directive. Given that Malta forms part of the Euro area financial system, its banking system has to be viewed in the light of the European dimension and not in isolation.
However, the Malta Central Bank Governor has dismissed speculation in the international press that Malta’s banking sector is about to face the same difficulties presently being faced by Cyprus because of its size relative to the country’s economy. In fact, the size of Malta’s domestic banking system is currently below the Euro area average. In addition, the assets holding of the total banking sector is well diversified and with very limited exposure to countries undergoing economic adjustment such as Greece. All this is backed by continuous growth in the Maltese economy, moderate inflation and a much lower unemployment rate than the Euro area.
Malta’s financial regulatory and supervisory system is subject to regular assessments by international organisations such as the EU and the IMF. The way forward is to build on the local banks’ strengths by allocating further profits to provisioning in order to enhance their resilience.
Malta’s banking sector is ‘sound and robust’ with high solvency, profitability and liquidity, according to the Malta Central Bank Governor. Statistics show that the Maltese banking sector compares well to the European averages.
The Maltese banking sector comprises both domestically-oriented as well as international banks, the latter having limited links to the local economy. The Maltese banking system has strong solvency ratios and is well capitalized with an overall capital adequacy ratio exceeding 50 percent. This is well above the 8 percent minimum regulatory requirement stipulated in the Capital Requirement Directive. Given that Malta forms part of the Euro area financial system, its banking system has to be viewed in the light of the European dimension and not in isolation.
However, the Malta Central Bank Governor has dismissed speculation in the international press that Malta’s banking sector is about to face the same difficulties presently being faced by Cyprus because of its size relative to the country’s economy. In fact, the size of Malta’s domestic banking system is currently below the Euro area average. In addition, the assets holding of the total banking sector is well diversified and with very limited exposure to countries undergoing economic adjustment such as Greece. All this is backed by continuous growth in the Maltese economy, moderate inflation and a much lower unemployment rate than the Euro area.
Malta’s financial regulatory and supervisory system is subject to regular assessments by international organisations such as the EU and the IMF. The way forward is to build on the local banks’ strengths by allocating further profits to provisioning in order to enhance their resilience.