Restrictive regulation was making it difficult for banks to issue loans, shadow economy minister Claudio Grech told parliament this evening.

Speaking during the debate in second reading of bill amending the Banking Act, Mr Grech said this was having a knock-on effect on investment, as entrepreneurs were finding it difficult to access financing.

The Bill seeks to implement EU directives on banking regulations and to amend the Banking Act to this effect.

Charles Mangion (PL) said that accessing finance would become increasingly important as the Maltese economy continued to develop. The manufacturing sector would soon be facing the “revolutions” associated with the global advent of 3D printing and robotics, he said. 

Turning to due diligence requirements, Dr Mangion said that these were too restrictive, with companies already vetted for a loan or license being forced to undergo the same process afresh every time they applied. As things stood, due diligence criteria were universal, when it was clear that not all situations required the same level of vetting.

Furthermore, he disagreed with the imposition of “one-size-fits-all” regulation by European authorities, arguing that not all European economies had the same financing requirements. Countries should be left free to tailor regulations to local circumstances, he argued.

Referring to attempts to harmonise taxation within the EU, he said that taxation was, and should remain, up to the discretion of the individual member-states. As long as a given tax system was fair, transparent, and accountable, its details should be left in the hands of the respective government.

Dr Mangion concluded by referring to recent media reports on the lack of correspondent banking in the Maltese Islands. Contrary to what had been reported, he said, the reason for this was the low profitability associated with a small market such as Malta; it had nothing to do with any inadequacy pertaining to the banks themselves.

Winding up the debate, Finance Minister Edward Scicluna reiterated that the new legislation would go further to protect taxpayers and depositors when banks were at risk of failing. Whereas the 2008 financial crisis had forced governments to bail out those banks deemed too big to fail, banks would now be required to guarantee deposits of up to €100,000 themselves. Furthermore, if a bank’s assets were to be liquidated, the first priority would be given to guaranteeing deposits, with depositors taking priority over shareholders.

The Bill was unanimously approved in second reading and committee stage.