The news that Deutsche Bank terminated its correspondent banking relationships with Bank of Valletta has been interpreted by sections of the media, including the Times of Malta, in a way that does not reflect the realties that are evolving in the world of international finance.

No doubt, the curtailment of correspondent banking services offered by large international banks to smaller banks is not a local phenomenon affecting only banks in Malta, but an international development.

It is also a major cause of concern for respected international institutions like the International Monetary Fund and the Bank of International Settlements.

Small local banks like BOV are as essential to promote trade as larger international banks. The global banking community needs to cooperate in order to restore faith in the clearing system.

There is no doubt that all banks are under increasing regulatory scrutiny to ensure that the system does not favour financial crime. Bank of Valletta is very conscious of its obligations to ensure that the transactions it handles on behalf of its clients are bona fide and not aimed to condone or encourage financial crime.

We regularly speak to our EU regulators to update them on the efforts we make to improve our anti-financial crime systems.

In the last few years we have substantially beefed up resources to enhance our anti-financial crime and risk management processes. We have done this to ensure that our practices are fully in line with what is expected from us to prevent the illegitimate use of our services by rogue potential clients.

We review our payment processes on a regular basis. This often affects the timeliness of the services we give to our clients who at times complain, but generally understand that it is essential for us to fulfil our anti-financial crime obligations consistently.

We deal withshort-term setbacks in a pragmatic way. This is what we have done when Deutsche Bank terminated their correspondent banking relationship with BOV

We do this not only because it is the right thing to do, but also to preserve the bank’s and Malta’s reputation in international financial circles.

In the short term we engage with our correspondent banks to make sure that we are in a position to continue to service our clients and keep the wheels of trade turning smoothly. These correspondent banks do not just take our word for the commitment we have to prevent financial crime from being facilitated by our services, but they often scrutinise our systems to see for themselves the resources that we are committing for the prevention of financial crime in our payments processes.

Bank of Valletta is going through an important phase of consolidating its position as Malta’s largest bank.

Protecting our depositors and shareholders’ interests is the top priority of the board of directors and the executive team. We know that to achieve this aim we need to take the long-term view by enhancing our risk management functions while improving the quality of service we give to our current and potential customers.

We know that sound correspondent banking relations have to be built on mutual trust among members of the international banking community.

We are confident that we are doing the right things to fulfil our ethical and regulatory obligations relating to preventing anti financial crime.

We are also supporting the efforts made by international regulatory bodies to ensure that international clearing banks do not starve smaller local banks from the services they need to promote trade.

We know that we can only be effective in this effort if we show that we are doing all that we can to prevent the use of banking services by rogue operators.

We are certainly not in denial of the impact of regulatory developments and the way that the decisions of major correspondent banks are affecting the business of BOV and hundreds of other small banks internationally.

Banks almost by definition take the long-term view on how to serve their customers in the best possible way. We deal with short-term setbacks in a pragmatic way. This is what we have done when Deutsche Bank terminated their correspondent banking relationship with BOV.

We never aim to promote growth in the short-term at the cost of long-term sustainability. Our record over the past several years has shown that we are capable of updating our business model to reflect changes that are currently affecting our industry and to protect the long term interests of our depositors and shareholders as well as of our customers.

Deo Scerri is chairman of Bank of Valletta.

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