A lot of things are built on reputation. Any business who is lacking in reputation, suffers. When it comes to the financial sector and to the banking sector, reputation becomes more important. Some might suggest that since the economy is still doing well, the negative repercussions of a loss in reputation are not being felt. I tend to disagree with such an argument. Reputation takes a lot of time to build, however, once it is lost, it takes a lot of energy and time to rebuild it again.

Let me take you back to some years ago. In the past, the Maltese banking sector was dependent on two main banks, with the presence of a few other smaller local banks. In the 1990s the Nationalist Government wanted to diversify the economy to include a strong financial service sector. The decision was taken to strongly invest in this sector. This strategy left a very positive impact since a large number of students, including myself, opted for the business subjects namely accounts, economics, banking and finance and complimentary subjects. The local banking scene was however still limited since the Maltese economy did not have any international banking brands operating from Malta. The decision was taken to attract a global brand and, HSBC, a global bank, invested and started to operate from Malta. Obviously such a move put Malta's name onto the international financial scene since a global banking group had put its trust in the Maltese economy. Afterwards, with the updating of our laws, Malta's accession in the European Union and a number of other factors, the local banking scenario started expanding, resulting in a number of other banks operating from Malta.

Malta's reputation was solid, and as a consequence, the financial sector as a whole grew stronger. Malta was considered to be a reputable jurisdiction and offered a number of advantages over other countries which were considered as our competitors in attracting investment.

As time progressed, a number of decisions taken by the present Government have negatively impacted the financial and banking sector. Some decisions may have been taken due to perhaps a great risk appetite by the present administration to achieve greater economic growth which however had serious repercussions which harmed our reputation. For example a number of banks had to have their license revoked. Inaction by the present administration also had this undesirable effect.

The recent statements made by the CEO of HSBC carry a lot of weight.   He said that 2018 was difficult for the local financial services sector since it suffered further reputational damage. He urged more action to avoid more significant long-term risks. Besides the fact that lower profits have an impact on shareholders and other stakeholders, it is worth noting that any decision taken by HSBC might have serious consequences on our country and economy. The consequences are not just of an economic nature emanating from the fact that HSBC is one of the main banks in Malta. Any decisions taken and also comments such as these expressed by the CEO can send a strong message to other investors wishing to invest in Malta.

What is most worrying is the laissez-faire attitude that some who are responsible for these sectors are adopting. The argument that even other countries suffer from these instances is fallacious. Our economy is a small economy and is not diversified like the economy of much larger economies than ours. So any negative instance which happens in for example, Germany, will not impact it like it would impact us.

Our economy is strongly dependent on the financial and banking sector.

Let's protect it.

Mr Puli is an accountant and financial consultant. He is also a PN minority leader at Qormi LC