Thursday, 9th October 2008
Global financial crisis
Maltese deposits not affected
Deposits in Maltese financial institutions should not be affected by the prevailing international crisis, the government said yesterday as the European Central Bank (ECB) cut interest rates by 50 basis points to 3.75 per cent.
Finance Minister Tonio Fenech said the financial turmoil, considered to be the worst crisis in 80 years, was not affecting Maltese institutions which are not facing any liquidity problems.
EU Finance Ministers agreed at a meeting in Luxembourg on Tuesday to take common measures to counter the crisis in the financial markets.
Mr Fenech explained that the ministers had agreed on an EU-wide deposit guarantee of €50,000 for European savers. This will also apply to Maltese depositors, who until now were covered for the first €20,000 of their savings.
The government went a step further and increased the minimum deposit guarantee of Maltese depositors to €100,000 in order to "put people's minds at rest".
Mr Fenech also agreed on government intervention if any financial institution were to face any problem.
Flanked by Central Bank Governor Michael Bonello and the chairman of the Malta Financial Services Authority Joe Bannister, Mr Fenech noted how Maltese financial institutions were on a strong footing.
He stressed that all the banks in Malta were safe, with no liquidity or solvency problems. "Maltese banks are highly liquid and highly capitalised and they are well above the 30 per cent minimum liquidity."
There are about €8.5 billion deposited in Maltese financial institutions, invested in stocks and bonds in very sound institutions. Thus, there was absolutely no need to worry, Mr Fenech said.
Stressing that he did not want to come across as a financial investments' promoter, Mr Fenech urged Maltese investors not to panic about the fall in share prices on the international markets, saying these will eventually pick up.
Mr Bonello said that, since the ECB had announced the reduction in interest rates, share prices of the HBOS Bank in the UK had shot up by 50 per cent in just a few hours. This effectively meant a reduction in loan repayments but each bank had to take the decision individually.
Mr Fenech reiterated his assurances in Parliament later in the day.
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Comments
Please read my contribution carefully. You understood the opposite!
We are very lucky to have such clever, humble yet outstanding brains like Michael Bonello, Central Bank and Rodrick Chalmers, BOV
Minister Fenech truly said, Maltese deposits will not be effected.... Your investment simply is in UK shares.
There is no other side of the coin in your argument.
interest rates. Going lower means we're getting less interest on our
hard earned cash and savings. We are suffering all this because of
speculators who made big profits out of real estate and land. It so
happens that the Banks lent money on inflated parallels! Let's hope
there are no hidden surprises round the corner. Finally, please do not turn this into a political issue; it's everybody's issue.
Guess you might be one of those followers of former leader Dr Sant who still believes that the ''No'' vote actually won the referendum. Don't you realise that this mess, as you well mentioned, has nothing to do with being a member of the EU, but is more a global issue (thanks to reckless UK and US bankers)? Do you really believe if Malta did not join (''allahares'') the EU we wouldn't have felt this global financial earthquake? On the contrary, being part of the EU Malta benefits from financial protection/cushioning over its financial sector and common banking sector aid, thanks to it (ie. Malta) being mostly pegged to European Member states financial institutions. If we didn't form part of the EU; well, the only solution would have been to reply on Dr Sant and ask him to come up with one of his ''brilliant'' ideas to save Malta from the Credit Crunch Dragon. Actually I find it hard to accept how there are still voters who are not yet convinced after 4 years from Malta's accession to the EU, that this was the best possible deal Malta has had from its Independence date.
The Maltese bubble burst will take a few more monthsto happen till the banks and the government will be honest to tell the truth when the defaults of the speculators is highlighted.
Mepa has issued too many permits for speculation and greed.
It will be very sad to see greed affecting the pocket of the diligent Maltese money saver!
My friend when you invest in the stock market you are taking a chance. The stock Market is not for the ones with weak hearts. You also should have at least a 5 year investment window when investing in stocks, Mutual funds and other exchange traded instruments.
If you do not like to take the risk, leave your cash deposited with one of the banks. But then the reward over time might not be as rewarding.