Malta has a strong banking sector with a well diversified asset holding, the government said this evening.

It said in a statement that the World Economic Forum ranked Malta 13th out of 144 countries in terms of the soundness of its banking sector.

The country’s banking system has strong solvency ratios, was well capitalised with an overall capital adequacy ratio above 50 per cent, significantly exceeding the minimum regulatory requirement of eight per cent under the Capital Requirement Directive.

In a statement motivated by the crisis in Cyprus, the government said Malta joined the euro area to further enhance its macroeconomic and financial stability, and to contribute to the stability of the euro area-wide economic and financial system.

Together with other EU states, it participated in the setting up of a euro area regulatory and supervisory framework, to which it has also actively contributed. The national financial regulatory and supervisory system was regularly subject to assessments by international organisations, including the EU and the IMF.

Malta, the government said, supported the argument of the Luxembourg government that the banking system of an EU state, being part of the single market and, subsequently, of a developing banking union, could not be regarded in isolation.

Malta formed an integral part of the euro area financial system. It fully supported an adjustment programme which was required by a member state to re-establish sound macro-economic and financial stability, and, in this respect, subscribed to the one-off measures undertaken with regards to Cyprus.

The government said that the size of Malta’s domestic banking system was at present below the euro area average.  The five domestically-oriented banks had total assets of 218 per cent of GDP, while the eight banks with limited links to the domestic market had assets totalling 77 per cent of GDP.  The rest of Malta’s banking sector was made up of 14 international banks with no links to the domestic economy, with assets totalling 494 per cent of GDP.