Clearly Tony Zammit Cutajar (May 14) has an axe to grind. This is evident from this and his earlier contributions in The Times on the Price Club fiasco. Instead of saying mea culpa he slings mud at the banks.

I hold no brief from the banks to defend their actions. They are not above criticism but not on the grounds alleged by Mr Zammit Cutajar. I spent a lifetime in banking and financial services so I think I can claim to know something about the principles and policies of bank lending. In particular, your correspondent has chosen to put aside the very valid contribution of banks to Malta`s fantastic economic progress since the start of serious industrial development in the early sixties following the first shock of the British services rundown.

Mr Zammit Cutajar alleges that banks lend only against the security of immovable property as valued by their architects. He is very far from the truth! Does he for one moment imagine that all the successful industries that abound were financed by bank borrowings secured as he alleges?

Does he think that companies financed all their fixed capital (machinery and equipment etc.) and working capital requirements from their own funds? Does he not realise that most of these companies operate in premises rented from the MDC and therefore all the lending bank can take as security is a charge over machinery and equipment (not the building!) which, more often than not, is of a specialised nature and therefore of doubtful value in a forced sale?

It is absurd for Mr Zammit Cutajar to suggest that a lending bank`s security should be restricted to just two-thirds of the value of a commercial borrower`s immovable property. Unsecured creditors should learn from the banks how to protect themselves rather than cry wolf after they have burnt their fingers.

If Mr Zammit Cutajar`s company, as is evident from his reasoning, is smarting under a bad debt because of the collapse of the Price Club should he not blame his own company`s poor credit control rather than sling mud at the banks whose lendings to Price Club kept the company going until the bubble burst and, according to press reports, were not fully secured?

So my own answer to the question posed by the Talking Point is quite the opposite to Mr Zammit Cutajar`s `yes`. I say no, Malta`s banks have not been given a privileged position. The truth is that they are better at assessing risks than the Price Club`s suppliers, who were hell bent on increasing their sales while the going was good, forgetting all about good management principles, such as credit control.