Maltese banking system in good shape – HSBC

Although the banking system in Malta is in good shape, the consequences of a pronounced world economic recession is bound to leave its mark on the local economy, HSBC Bank Malta CEO Alan Richards said.

While some form of world recession was inevitable, Mr Richards said it is encouraging to see governments worldwide working on a consolidated plan of action to support the banking system and to facilitate the process of rebuilding trust between banks and to restore confidence back into the market. There is light at the end of the tunnel on the credit crisis but the consequences of the credit crunch are expected to last until 2010 or 2011, he said.

"The authorities are in constant touch with us and the fact that Malta is in such relatively good shape, given the global financial turmoil of recent weeks, is testimony to the effective policies of government, the Central Bank and the MFSA.

"In hindsight, Malta’s membership of the EU and its conversion to the euro could not have come at a better time. Personally, I think it has significantly reduced the risks Malta would have otherwise faced," Mr Richards said.

Governments worldwide have announced bank recapitalisation programmes to get the banking system back on its feet. The recapitalisation of banks by governments has been considered a necessary evil and unfair on taxpayers who have been left with no choice but to come to the rescue of what many perceive as irresponsible banking practices by major banks. HSBC, like Standard Chartered, is one of the few banks that remain in the premier league of banking.

"In recent years, the HSBC Group has been seen in some quarters as overly cautious and conservative. The constant priority placed on capital, liquidity and prudent risk management over many years explains the financial strength of the Group which has been so self evident in recent weeks," Mr Richards noted.

As the world’s largest bank by market value, and with one of the highest capital ratios in the world, HSBC said it is outperforming its peers particularly in the present turmoil. HSBC said it has also been active in the British interbank market in recent days, coming to the rescue of other banks struggling with the ongoing financial crisis.

The international press has welcomed HSBC’s financial strength with The Independent in Britain going as far as saying that HSBC is among the safest places to keep savings.