GRTU calls on government to guarantee Libya business loans
GRTU director general Vince Farrugia has urged the government to guarantee the loans of businesses with interests in Libya and for the banks to be more flexible in dealing with these clients.
Mr Farrugia said the government had responded well during the global banking crisis by safeguarding people’s deposits through guarantees, and should therefore adopt a similar strategy in the Libyan crisis.
“Some of the banks are now tightening their belts with people who have business interests in Libya and who have bank loans. They should actually be a bit more flexible after all the government used taxpayers’ money to guarantee people’s deposits during the banking crisis,” Mr Farrugia told The Times Business.
He added: “The government task force on Libya should now focus on helping these businesses which may have problems with the banks. I am urging the government to act as it did during the banking crisis and guarantee these business loans.”
Contacted by The Times Business, Malta’s larger banks said they were offering support to affected businesses on a case-by-case basis.
Bank of Valletta said it had always acted with the necessary prudence when dealing with customers operating in countries perceived to carry high political risk.
“While BoV has never refused to consider financing business ventures and operations in Libya, it has always done so with great caution. As a result, the risks to the bank arising from the current situation in Libya are quite contained. In the meantime, we are dealing with those customers who are experiencing difficulties in Libya on a case-by-case basis, while safeguarding the interests of both sides,” the bank said.
HSBC Bank Malta said it remained “fully supportive” of customers with business interests in Libya and would continue to work with them on a case-by-case basis.
“HSBC will continue to monitor closely the developments in Libya and work with the appropriate Maltese authorities accordingly,” a spokesman added.
Meanwhile, Mr Farrugia said he did not know how the Libyan crisis would end “but there is definitely going to be a long period of instability and insecurity whatever the outcome and this is bound to have negative consequences for Maltese businesses.”
“Our GRTU members are mainly suppliers to Libya who are very worried about the situation there. The logistical situation is in complete disarray, business is at a standstill. It is a logistical nightmare,” he said.
Mr Farrugia said that if Gaddafi were to win – “which now seems likely” – the Libyan leader and his regime would be isolated and shunned by the international community, and this was likely to have negative repercussions for Maltese businesses.
Mr Farrugia pointed out, however, that in such a scenario there could be a silver lining for Malta, as the island could be used as a residence by expatriates who had business dealings with Libya, in the event of an isolated Libya.
“We did a superb humanitarian job in getting our nationals out and helping in the evacuation of foreign nationals, but we need to focus more on helping the needs of the business community with interests in Libya. The government must give extended guarantees to these companies for their loans. It must also urge the banks to be more flexible,” he said.
He quoted one economic operator in Libya who had told him: “Everyone is planning for the worst possible outcome. The Maltese will not be allowed in easily now and the banks are slaughtering us. And many employees will be let go soon. All people want is time to rearrange their businesses, time the banks refuse to give because they are sensing a kill. That is why we are calling for EU help in the form of bank guarantees. We estimate that loss of income from Libya will be at least €65 million imminently.”
He said the GRTU was very concerned about the suffering of the Libyan people and had sent 60 pallets of medical and humanitarian supplies to Libya worth €1 million. Mr Farrugia thanked all those who had participated in the GRTU’s campaign to help the Libyan people. “I would like to express the GRTU’s solidarity with the Libyan people in these difficult times,” he said.