Updated 05 May 11am - Added video
Despite the alarm bells being sounded about Malta’s reputable financial services sector, the Central Bank is insisting it has no indications to substantiate these concerns.
Deputy governor Alexander Demarco commented to that effect yesterday when the Times of Malta sought the Central Bank’s reaction to the effects of corruption allegations and suspicions of dubious practices involving shady financial companies and top government officials.
“The Central Bank and the European Central Bank have no indications that Maltese banks are not strong and reliable, and from that aspect we are not concerned,” Mr Demarco said.
The Central Bank deputy governor yesterday gave this reaction during a business breakfast on its 2016 annual report.
While noting that the bank’s role was not that of a financial services regulator, he said its remit was to ensure the sector’s stability. Mr Demarco added that as from 2014, the ECB had assumed responsibility for bank supervision and adopted a “more intrusive” level of scrutiny in this respect.
There are no indications that Maltese banks are not strong and reliable
Malta’s financial services sector, a significant contributor to the country’s GDP, has increasingly been in the spotlight in the wake of allegations involving the Prime Minister’s wife and his top aide.
These claims are the subject of a pending magisterial inquiry.
Last week, the Malta Employers Association issued a statement expressing alarm in the face of what it described as a “national crisis”, while pointing out the “serious failure” of the Malta Financial Services Authority to investigate the “doubtful” dealings of Pilatus Bank.
The latter is a Maltese-registered bank set up in 2014, whose name cropped up in allegations of kickbacks on the sale of passports involving the Prime Minister’s chief of staff, Keith Schembri.
Furthermore, a Pilatus Bank account was allegedly used to deposit $1.017 million in secret Panama company Egrant, purportedly belonging to the Prime Minister’s wife.
Both Michelle Muscat and Mr Schembri have denied the claims.
Doubts were also raised by former Central Bank Governor Francis Vassallo, who told this newspaper that time was fast running out to do something to save the industry which employs about 15,000 people.
He added that Malta’s financial services sector had already been suffering in the wake of the Panama Papers scandal.
Mr Vassallo, who runs his own firm employing 60 people, feared that if Maltese authorities continued to tune a blind eye to the situation, Malta could end up like Cyprus, which until a few years ago was known as an unofficial tax haven.