Partit Demokratiku concerned about financial and banking sector

Partit Demokratiku said that HSBC’s possible exit from Malta is purely for commercial reasons and not political, and that nothing else should be read in the information issued.

However, PD said it is concerned about other worrying signs in the banking sector, mentioning a list of events that have cast a bad light on this important column of the economy.

1. The inability of Cypriot Popular Bank Public Company Ltd to sell its 49 per cent share in Lombard Bank, which led to the government controversially offering to acquire them with money from the National Development and Social Fund (the money from the sale of passports), a fund not set up for that purpose.

2. The ongoing scandal regarding Pilatus Bank and the failure of the MFSA and FIAU 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.

3. The arrest of that same chairman in the United States of America triggered a reactive clamp down on the activities of Pilatus Bank. As this was something that should have been done much earlier, it has now harmed the reputation of our regulatory capabilities in the financial sector further.

4. The fact that Bank of Valletta was used by Pilatus Bank to service dollar transactions after its correspondent banks in the USA stopped doing so due to concerns regarding its operations.

5. The fact that Wells Fargo and JP Morgan as well as Deutsche Bank no longer act as correspondent banks to service dollar transactions for Bank of Valletta is partially due to fact 4.

6. For reasons not fully explained, the resignation of the long-serving director of the MFSA’s banking supervisory unit, Karol Gabarretta. This sends signals that all is not well at the MFSA.

PD said that the entire servicebased economy hinges on having a strong, well-regulated financial sector. The online betting industry would be unable to function if our local banks are shunned by those overseas, with the consequences being the collapse of our economy.

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