Bank of Valletta’s executive head of risk management Miguel Borg outlined BoV Group’s priorities of prudent capital management and liquidity at a recent stress test conference organised by the European Banking Authority in London.

“Adequate capital is not only the motor which drives the bank’s business, it is also key to the maintenance of stability in the Maltese financial sector,” Mr Borg said while on a panel at the event. “This explains why the prudent and efficient management of capital is one of BOV’s top priorities.”

During his intervention, Mr Borg focused on BoV’s stress testing methodology and on its use of reverse stress testing. He emphasised BoV’s extensive use of stress testing techniques as part of its portfolio risk management toolkit.

He explained how Bank of Valletta performs internal stress tests on its capital and liquidity to help safeguard the bank’s stability in an environment of competition and uncertainty.

“The EU wide stress-test is an authoritative and independent confirmation of our prudent capital management strategy and responsible dividend payout policy,” he added.

The EBA officially came into being in January last year and has taken over all existing and ongoing tasks and responsibilities from the Committee of European Banking Supervisors.

The EBA acts as a hub-and-spoke network of EU and national bodies safeguarding public values, such as the stability of the financial system, the transparency of markets and financial products and the protection of depositors and investors.

Most of the European banks which took part in the stress test on their capitalisation in 2011, as well as national regulators, were represented at the event.