The Malta Independent 18 August 2019, Sunday

EBA raises serious concerns over MFSA’s handling of Pilatus Bank - EPP

Monday, 24 September 2018, 20:22 Last update: about 12 months ago

The European Banking Authority (EBA) has raised serious concerns over the MFSA's handling of Pilatus Bank, a press statement by the European People's Party read.

In a letter written to MEPs, the EBA Chairman Andrea Enria said, among other things: "The EBA's preliminary enquiries have raised significant concerns concerning the MFSA's authorisation and supervisory practices in relation to Pilatus Bank. However, in the light of the requirements set out in Union law for prudential supervisors which make it difficult to conclude that there have been breaches of clear and unconditional obligations established in Union law, and especially in light of the significant supervisory actions taken by the MFSA in relation to Pilatus Bank, I have decided to close the case without opening a breach of Union law investigation."


"Notwithstanding the decision not to open an investigation, there are a number of areas where we believe the MFSA's practices should be improved. The MFSA has informed us of a number of measures which it is implementing to improve its authorisation and supervisory processes and the EBA intends to monitor this, including through an on-site visit which we currently propose to carry out in mid-2019."

"In particular, as a result of our enquiries I have expressed concerns to the MFSA about its supervisory practices in four key areas: Engagement between the MFSA and the Financial Intelligence Analysis Unit during the authorisation process. Robustness of due diligence checks conducted as part of the authorisation process. Prudential supervisory response to concerns about effectiveness of AML/CFT systems and controls. Resources and risk prioritisation given to credit institutions pursuing a private banking business model with predominantly non-resident customers."

"I have therefore asked the MFSA to update the EBA on a quarterly basis on the measures adopted to strengthen its supervision and the state of play of its implementation in these areas. EBA staff will also carry out a further on-site visit to the MFSA which is currently scheduled for mid-2019 to assess progress in the implementation of these measures and the EBA will then review what, if any, further measures it considers need to be taken," the EBA Chairman said in his letter.

Commenting on the situation, PN Head of Delegation in the EU Parliament said that by commencing the proedure for Pilatus Bank to have its license withdrawn, the MFSA has very narrowly escaped a formal investigation by the European Banking Authority,

"The EBA has nevertheless identified serious concerns with the manner in which Pilatus Bank was handled, and which must be addressed", said David Casa.

The full letter from the EBA to the MEPS can be read here.

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