Malta Devel­op­ment Bank to play ‘ma­jor role in plug­ging huge fi­nanc­ing gap’

Malta Independent - - NEWS -

Deputy Prime Min­is­ter Louis Grech yes­ter­day met mem­bers of the Malta Bankers’ As­so­ci­a­tion (MBA) to brief them about the Malta Devel­op­ment Bank (MDB) and dis­cuss with them the role that the pri­vate banks will have in the new Bank’s op­er­a­tions.

The Malta Devel­op­ment Bank, Mr Grech said yes­ter­day, will “play a ma­jor role in plug­ging huge fi­nanc­ing gap”.

The Malta Devel­op­ment Bank will serve as a sec­ond-tier fi­nan­cial in­sti­tu­tion when pri­vate com­mer­cial banks fail to make ap­pro­pri­ate fi­nanc­ing avail­able, or when such is of­fered, nor­mal mar­ket terms are not given.

In a pre­sen­ta­tion to the banks by Rene Sal­iba, chair­man of the Work­ing Group ap­pointed by the Deputy Prime Min­is­ter, it was re­vealed that the Group had iden­ti­fied a fi­nanc­ing gap of be­tween €2.3 bil­lion and €3.1 bil­lion, which, if one in­cluded a large in­fras­truc­tural project like the mono­rail or a light rail­way, could eas­ily reach be­tween €1.4 bil­lion and €2.3 bil­lion.

Mr Grech re­ferred in par­tic­u­lar to the as­sis­tance that the MDB could give to small and medium-sized en­ter­prises, whose fi­nanc­ing gap was es­ti­mated at be­tween €334 mil­lion and €602 mil­lion.

The Bank is ex­pected to have an au­tho­rised cap­i­tal of €200 mil­lion, al­low­ing it to lever­age this to around €1 bil­lion of loans in due course. The ini­tial paid-up cap­i­tal is ex­pected to be around €30m, with fur­ther cap­i­tal pay-ups de­pend­ing on the growth of the Bank’s busi­ness.

Mr Grech said that the set­ting up of such an in­sti­tu­tion will sig­nif­i­cantly ex­tend Malta’s fi­nan­cial struc­ture and con­trib­ute to eco­nomic growth.

Rep­re­sen­ta­tives from APS Bank, Bank of Val­letta, HSBC Bank, Lom­bard Bank, Med­bank / Med corp and MBA that were present for the meet­ing wel­comed the es­tab­lish­ment of the Bank and agreed that it would be a very use­ful in­sti­tu­tion com­ple­ment­ing and sup­ple­ment­ing the lend­ing ac­tiv­i­ties of the pri­vate banks. They ex­changed views with the Deputy Prime Min­is­ter, Mr Sal­iba and the Deputy Gov­er­nor of the Cen­tral Bank, Mr Al­fred Mif­sud, about var­i­ous as­pects of the pro­posed Banks’ op­er­a­tions.

The Bank has al­ready ob­tained the ap­proval of the Euro­pean Com­mis­sion, af­ter it was found to be in line with EU state aid rules.

The Bank will be owned 100 per­cent by the Mal­tese govern­ment. It will have a guar­an­tee from the Mal­tese Govern­ment on both the as­sets and li­a­bil­i­ties side, the ex­tent of which will be ne­go­ti­ated be­tween the Bank and the Min­istry of Fi­nance.

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