BAWAG PSK Group, the third largest bank in Austria with a balance sheet of Lm21 billion, opened a subsidiary in Malta yesterday.
The Malta operation is capitalised at Lm210 million.
The bank, at The Strand, in Sliema, was opened by Finance and Economic Affairs Minister John Dalli and BAWAG chief executive Johann Zwettler.
Mr Dalli said the opening of the bank was a very welcome development in the local economic environment as it will be a vital contribution to project finance in Malta.
"Finance is the life link to a healthy economy and increased availability of funds as well as accessibility to them for projects, large and small, will stimulate new venture and their implementation.
"This initiative will increase competition in the local financial services sector, contributing to creating a more customer-oriented financial services market," Mr Dalli said.
Mr Dalli said BAWAG had taken the decision to open up in Malta in view of Malta's becoming an EU member. Such membership would bring more opportunities to Malta and the opening of the bank here was testimony of what was still to come.
BAWAG Malta Bank Ltd will concentrate primarily on commercial banking, offering loan and deposit services in any currency other than the Malta lira.
BAWAG Malta Bank Ltd's managing director is an Austrian, Otto Karacek. Former Central Bank governor Francis Vassallo is chairman.
"BAWAG has taken Malta very seriously. The Malta operation is highly capitalised but the risk is considered to be low because of political stability and the security engendered by membership of the European Union. The Maltese tax regime is favourable but these have been the crucial points," Dr Karasek said.
"We made our initial enquiry with the Malta Financial Services Authority in February and here we are, in September, ready to begin. The MFSA process was dynamic, structured and consistent. We have also received highly satisfactory service from all those involved in the actual setting up of these offices."
The bank will lay strong emphasis on financing of projects for both the public and private sectors, in Malta and in the Mediterranean basin.
BAWAG Malta Bank Ltd will also participate in international syndicated loans for corporate entities, banks and countries in the Mediterranean. It will issue bonds in Malta to international investors, in line with the special incentives on money market term deposits for Austrian companies.
The BAWAG PSK Group is expanding into various EU member and accession countries by buying existing operations, setting up new banks, or opening representative offices. Malta is the latest such move. It is already present in Hungary, Slovenia, Slovakia, the Czech Republic and Ireland, besides Austria.
"This step shows our confidence in the expansion of the European Union.
"Growth in Malta is likely to be boosted. The Maltese market is very important to us but it also allows us access to much of the Mediterranean region. This is an onshore operation and we want it to be a Maltese bank," Mr Zwettler said.
The BAWAG Banking Group was founded in 1922 by Karl Renner, the State Chancellor of the First Republic of Austria and Federal President of the Second Republic of Austria, as a retail bank for the working classes.
Its majority shareholding was, and remains, owned by the Austrian Federation of Trade Unions. BAWAG was a pioneer in retail banking and it has since grown to become one of the largest Austrian banks.