In today's issue, readers can read the comments made by the Governor of the Central Bank, Professor Josef Bonnici, while speaking on the Central Bank's Annual Report
In particular, reported here, we can see how at the end, notwithstanding all the claims that have been made that Malta is not exposed to fallout from the international crisis, we find that we have, instead.
Professor Bonnici had no qualms to mention the institution that permitted the contagion to come here. He said that the problems faced by FIMBank in its business in Greece (as can be seen later, it would seem that FIMBank's trouble originated from India and Russia) have in fact affected the standing of Maltese banks, although fortunately not enough to turn the overall metric into negative.
The graph shown on page 2 shows that while the core domestic banks have done well for themselves and are very healthy, as are the international banks registered in Malta, the same cannot be said of non-core domestic banks whose return on assets and return on equity turned negative.
Governor Bonnici mentioned FIMBank by name but he also said there were one or two other banks in this category that also faced problems. He did not name these one or two banks.
On 19th March, this newspaper had reported, with regards to FIMBank: "2014 created significant challenges for some of the group's international business, with a combination of economic issues, adverse market conditions and credit defaults leaving their mark. Consequently, FIMBank experienced significant impairment events across various Group entities, making the year one of the most challenging in FIMBank's existence. As a result, the group registered an after-tax loss of $45.23m, compared to a loss of $4.22m in 2013.
Commenting on developments in 2014, Acting CEO Simon Lay said: "The prolonged geo-political tensions in Eastern Europe continued to increase economic uncertainty in Russia, which impacted our operations in this country; this happened in conjunction with credit impairments in a number of other markets."
Elaborating on the principal factors which affected FIMBank's financial performance in 2014, Mr Lay explained that: "The group's positive operating results were completely wiped out by impairments of $51m, emanating particularly from India and Russia, but also from FIMBank's solo performance. Nonetheless, group liquidity remains strong, while capital adequacy, measured in terms of Basle III/CRD 4 requirements, stood at 13.8% for Total Capital, of which 13.3% is Tier 1 - significantly above the minimum regulatory requirements."
The report added: "Moreover, in line with the stated aim of consolidating the Group's international footprint, the Board of Directors also approved a decision which will lead to discontinuing investments such as the one in FactorRus (Russia), which will no longer form part of the Group's investment strategy."
Readers remember that some years ago, in the height of the crisis, international opinion had been alarmed at the size of the holdings in banks registered in Malta, which were many times the size of the island's GDP.
The government of Malta and the banks of Malta themselves had reacted very strongly to these flighty and unbased speculation and succeeded in killing off the widespread rumour which could do a lot of harm to Malta.
Clear explanations of the solidity and seriousness of Maltese banks looked to have laid that rumour to rest.
One would not want this rumour to be resurrected by whatever happened to FIMBank. That is why the country is heartened by what the FIMBank chairman, Dr John C Grech said in the above-mentioned report - "The bank's turnaround strategy implies a period of consolidation where the focus will be on a rapid improvement in financial performance, the implementation of measures that aim at reversing the current causes of distress, and overcoming internal constraints, all the while retaining our customers at the centre of our strategic considerations. The board and management are encouraged by the support of the shareholders, in particular Burgan Bank and United Gulf Bank. Our controlling shareholders believe in FIMBank's business model, and are committed to supporting the group in overcoming the difficulties experienced in 2014 and a return to better times."