The government has of late been in the habit of issuing self-congratulatory statements each and every time that credit rating agencies or institutions such as the International Monetary Fund shower the country's economic growth with praise, at times glossing over the finer print and risk caveats.

But when Standard and Poor's this week highlighted the increased reputational and operational risks Malta's banking sector is facing, and increased its overall risk rating from four to six-out-of-10, there was no such announcement from the finance ministry.

In fact, it has been stone cold silence from those quarters since Thursday and instead it was the Central Bank and the Malta Financial Services Authority that did the talking.

Last month, the European Banking Authority found that Malta's Financial Intelligence Analysis Unit failed to impose effective sanctions against Pilatus Bank.

The credit rating agency said that even if potential weaknesses at what it described as 'internationally oriented financial institutions' did not pose a direct risk to domestic financial stability, Malta's banking reputation still 'could be at risk'.

According to S&P, allegations of money laundering against Pilatus Bank as well as its perception of poor transparency at some banks, have increased reputational and operational risks for the Maltese banking sector.

On the other hand, the agency said that the steady operating environment would continue to support local banks' profitability and that it expected banks to keep a solid funding profile, with customer deposits that "more than cover" their funding needs.

The fact that a credit ratings agency of the likes of Standard and Poor's says so bluntly that a nation's banking sector 'could be at risk' is not to be taken lightly, not at all.  This was a dire warning and whether the assessment is without basis, as being claimed by the Maltese authorities, is beside the point: the reputational damage the country is accruing is entirely unsustainable.

This was an alarm bell that is not to be ignored or treated lightly, not even in isolation, let alone within the wider context of the microscope that Malta's financial services sector is under with the EBA issue, the tax-avoiding letterbox companies the country hosts, its citizenship-selling scheme, its hosting of so many iGaming companies, the EU's questions about our rule of laws in the area and, lest we forget, the very long shadow that the Panama Papers continues to cast over the country.

The Prime Minister may put it down to the jealousy of other countries, and the finance minister may say that we are picked on because we are a small country, but the fact of the matter is that Malta is in the hot seat and in the spotlight whether we like, or deserve, it or not.

While the finance minister, who is accused of having turned a blind eye toward the Pilatus Bank situation, did not issue a reaction, the Central Bank insisted that the sector as a whole is 'sound, resilient and profitable'.

As far as systemic risks are concerned, the central bank insists that the quality of core domestic banks was not a matter of concern and that 'small international banks like Pilatus Bank posed no systemic risk to domestic financial stability.

As far as reputational risk is concerned, it pointed to a 'rigorous de-risking process' already underway would continue and mitigate any 'perceived reputational risk'.

The MFSA had a similar take on the matter, adding that 'major reforms are underway in its organisational infrastructure including investment in top tier supervisory technology, increase in human Resources and technical capacity in order to enhance the efficacy and governance of the sector but also to address current and future challenges particularly in the RegTech and FinTech space'.

It is these precisely these 'challenges', coupled with the country's headlong rush into the murky cryptocurrencies and bitcoins world that makes the need for our reputation to squeakier than squeaky clean.  We really cannot afford any more blemishes on our carefully-constructed financial services sector, where reputation is paramount and where serious investors begin to fear to tread after reading too many assessments such as that produced by S&P this week.