No Minister...and governor!

A front page report in The Times on December 4 referred to the addresses made by the Minister of Finance and the Governor of the Central Bank of Malta at the Institute of Financial Services' annual dinner.

It was reported that in their speeches these two speakers made it amply clear that they fully supported the European Central Bank (ECB) Governing Council's call that it "expected the banking sector to make their contribution to restoring confidence in the midst of the economic and financial crises" by passing on in full the ECB's rate cuts. The Governor said that he expected borrowers would benefit fully from the recent ECB rate cuts which totalled 1.75 per cent. The Minister of Finance is reported to have said that the government expected bank customers to benefit fully and unreservedly from the ECB rate cuts. He even went as far as to say, "To do otherwise would betray your own customers and in my opinion would be very short-sighted."

Well HSBC thought otherwise. For the second time in a few weeks, it failed to pass on the full ECB rate cut on home loans, the first time by 10 basis points and this time by 15 basis points. This means that whereas the ECB base rate is now 2.50 per cent, HSBC's base rate is 2.75 per cent - that is a full quarter of one percent higher. And that this not to mention HSBC's base rate for other loans is actually three per cent, that is half a percentage point higher.

Now surely that is a slap in the face for the Minister of Finance and the Governor of the Central Bank. What will these gentlemen do now, one might rightfully ask?