Matthew Xuereb
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.
13 Comments
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A Higgins
Oct 13th 2008, 08:42
Pierre, sorry, you mentioned the greed of the UK bankers, but surely you know that this was a knock on affect from the US Sub Prime mess??
Pierre Agius
Oct 10th 2008, 09:08
@ K Mercieca
Please read my contribution carefully. You understood the opposite!
Alexander Morana
Oct 9th 2008, 21:16
Most Mutual Funds have foreign content that is a basket of all kinds of stocks, whether in the UK, USA, Australia, Germany etc etc. They are affected by all the markets. Take heed, Mr. Pace and don't panic, these are long term investments so let them be. They will turn around when the international markets stabilize.
andre bianchi
Oct 9th 2008, 21:02
I usually follow the US market in detail and hate executive greed , however, I am a big fan of Warren Buffet, Chalie Monger and their exemplary Berkshire Hathaway. I have recently been following goings on on local banks too. Why did BOV issue a statement saying that their performance will be sustancially affected with the Lehman Brothers show down and later the finance minister stated that BOV only have .5% exposure to Lehman Brothers !!!! Who is correct ?
We are very lucky to have such clever, humble yet outstanding brains like Michael Bonello, Central Bank and Rodrick Chalmers, BOV
Christopher Borg
Oct 9th 2008, 18:37
@ P Pace
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.
Joseph Calleja
Oct 9th 2008, 18:17
oooooooops. That's what they said in the USA and the UK. and look at them now.
Louis Gatt
Oct 9th 2008, 17:29
First of all, Maltese Banks are affected...just have a look at the
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.
K Mercieca
Oct 9th 2008, 16:57
@ Pierre Agius
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.
Peter Green
Oct 9th 2008, 15:08
Speculators borrowed a lot from Maltese banks. They bought land at very inflated prices with our bank money. If or better when these speculation properties are not sold at high speculation prices our bank money will never be seen again even when the maltese banks seize these speculation properties since they will be sold at greatly devalued prices.
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!
Joe Vella
Oct 9th 2008, 14:36
@ Paul Pace
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.
william sciberras
Oct 9th 2008, 12:06
Now this is the problem. The minister is telling us that our money is safe,and Iwould like to believe him, but if he "thinks" that our money is safe, what if he cannot forsee problems, has he always kept his word can anyone remember any instance when ministers said one thing and another happened?
Pierre Agius
Oct 9th 2008, 11:22
Had Malta listened to the MLP, stayed out of the EU and hesitated from introducing the Euro, we would be in trouble. Just look at what happened to Iceland! Sorry but things have to be said.
Paul Pace
Oct 9th 2008, 11:13
The minister said that ''the financial turmoil, considered to be the worst crisis in 80 years, was not affecting Maltese institutions which are not facing any liquidity problem''. Perhaps it is true but what about the other side of the coin? As an investor my portfolio in La Valette Capital Crowth Fund today's unit price is GBP 1.163. A month ago it was GBP 1.42. Drop of 18%. What is this called? Are the authorities telling us half the truth?