The Democratic Party said on Saturday that while it believes the possible withdrawal of HSBC from Malta is purely for commercial reasons, it was nevertheless concerned about the financial and banking sector.

It highlighted a number of “worrying signs” in the sector namely:

■ The inability of Cypriot Popular Bank Public Company Ltd to sell its 49 per share in Lombard Bank, which led to the government controversially offering to acquire the shares with money from the National Development and Social Fund, a fund not set up for that purpose;

■ The ongoing scandal regarding Pilatus Bank and the failure of the Malta Financial Services Authority and Financial Intelligence Analysis Unit to fully investigate it last year despite allegations of money laundering coming from more than one source and the knowledge that the chairman of the same bank was under investigation by the FBI;

■ The arrest of that same chairman in the US triggering a reactive clampdown of the activities of Pilatus Bank;

■ The fact that Bank of Valletta was used by Pilatus to service dollar transactions after its correspondent banks in the US stopped doing so due to concerns regarding its operation;

■ The fact that Wells Fargo and J P Morgan as well as Deutsche Bank no longer act as correspondent banks to service dollar transactions for Bank of Valletta;

■ For reasons not fully explained, the resignation of the long serving director of the MFSA’s banking supervisory unit, Karol Gabarretta.

The Democratic Party said it would like to emphasise that Malta’s entire service-based economy hinges on having a strong, well-regulated financial sector, adding that the online betting industry would cease to be able to function if the local banks were shunned by those overseas, with a subsequent collapse of Malta’s economy.

“If HSBC does indeed decide to leave Malta it would be far easier to sell HSBC Malta to a reputable bank if we as a country were just as reputable. We urge the government and our regulatory institutions to get their act together immediately and investigate and clamp down on any abuse within the sector as soon as possible, no matter how close to home it is,” it said.