Malta has the world's 10th soundest banking system, a major survey has found, backing up the government's assurances that local banks are on a sound footing. The World Economic Forum Global Competitiveness report gave Maltese banks a score of 6.6 out of a maximum of seven.
A total of 12,000 corporate executives around the world were interviewed on a number of issues and ranked banks around the world on a scale of one to seven - one being insolvent and possibly in need of government assistance and seven being entirely healthy.
The WEF put Canadian banks at the top with 6.8 points, just ahead of Sweden (6.7) and Luxembourg (6.7).
The ranking index was released as central banks in Europe, the US, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end panic selling on markets and restore trust in the shaken banking system.
Finance Minister Tonio Fenech said the WEF report backed-up the government's insistence that local banks were safe and not experiencing any liquidity problems.
He said the report confirmed similar findings by the International Monetary Fund last June, which had shown that Maltese banks were at low risk.
Despite the international financial turmoil, the Maltese government has given a guarantee on bank deposits for up to €100,000, which according to Mr Fenech was merely a reassuring measure. Around €8.5 billion is deposited in local banks.
The minister said that no intervention whatsoever was needed for any Maltese bank as their base was on local deposits, their lending was also almost exclusively local and there were few defaulters. Local banks were not involved in inter-banking activity with banks overseas. Nor had they made overseas borrowing for liquidity reasons.
Despite several assurances, most local shares experienced a downward trend in the past week, which according to Mr Fenech was merely prompted by perceptions fuelled by the international crisis.
But while the Maltese banks received a clean bill of health from the WEF, British banks slipped to 44th place behind El Salvador and Peru, after a $86.5 billion pledge last week by the government to bolster bank balance sheets. The US, where some of Wall Street's biggest financial names have tumbled in recent weeks, rated only 40, just behind Germany at 39.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9, just below Libya and Lesotho.
Like all the 134 countries surveyed, Malta was probed for its financial market sophistication. It placed in 35th place for ease of access to loans and in 22nd place for regulation of securities exchanges.
Overall, Malta climbed four places to rank 52nd for its competitiveness, according to the WEF survey, but despite the improved ranking, most of the other EU countries dominated the top 20 places. The US placed first, followed by Switzerland, Denmark and Sweden.
WEF's top 10 soundest banking systems:
1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta