Urgent action is needed to speed up the way in which banks can seize the security offered against loans, when these fall into default, HSBC Bank Malta chief executive officer Andrew Beane warned.
The European Central Bank will allow banks seven years in which to recover the security against loans gone bad, as they do now – but after that, the banks would need to set aside capital to cover the amounts, money which could be used far more efficiently by banks, Mr Beane said.
“In Malta it takes as long as 10 years from the time of the default to recover the security, much longer than in the rest of Europe. So this will clearly have a negative effect on the local banks.
“Reforming the system would not take much, and the negative situation where we would need to tie up capital – for a technical rather than regulatory reason – could be avoided.”
Action needs to be taken for the good of the whole banking sector: Beane (mp3 file)
He was speaking to the Times of Malta at a presentation on Tuesday of the bank’s financial results for 2018, which saw the profit before tax drop 23 per cent to €38.6 million.
In Malta it takes as long as 10 years from the time of the default to recover the security
Earlier, Mr Beane warned in a company announcement about the danger to the sector as a whole: “2018 was difficult for the local financial services sector which suffered further reputational damage.
“It is essential that all market participants ensure that anti money-laundering standards are fully implemented without delay in order to avoid more significant long term risks. We welcome new initiatives announced by the local authorities, which the industry must fully embrace and support.”
The bank announced a final gross dividend of 1.8 cent per share, which brings the total dividend for 2018 to 5.8 cents.
This brings the full year 2018 dividend payout ratio to 47 per cent.