The Malta Independent 16 October 2019, Wednesday

‘We cannot intervene in what banks do’, Finance Minister says as BOV drop iGaming clients

Albert Galea Tuesday, 8 October 2019, 09:15 Last update: about 8 days ago

As Bank of Valletta embarks on a de-risking exercise which will see it drop dozens of companies from the iGaming sector, Finance Minister Edward Scicluna has told The Malta Independent that the government cannot intervene in the workings and policies of the bank or of any other banks.

Dozens of companies operating within the gaming industry and within other ‘high-risk’ sectors received a letter from BOV last week advising them that the bank was no longer in a position to provide services to them. It is believed that the decision comes after instructions given to the bank by the European Central Bank.

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The gaming industry is one of the major cogs in Malta’s economy, with 2018 figures showing that it contributed to 12% - over €1.1 billion - of the country’s GDP, but the decision by BOV has provoked reactions of alarm with the industry, with a number of people familiar with the industry fearing that it would result in many companies packing their bags and leaving the island.

Asked whether, given the news emerging from BOV, he was concerned, Scicluna said that the de-risking process has been ongoing ever since the financial crisis, with more regulations being added not just as a safeguard against money laundering, but also for reasons of credibility and credentials.

“We would like to see banks manage risks rather than simply brushing them aside, but we cannot intervene in what the banks do”, Scicluna lamented.

He noted that it is ultimately the banks which face the pressure from the single supervisor, noting that the pressure on them is tough and it only gets tougher when banks are seen to have such clients.

He said that technology is changing to the point that new initiatives and ideas are coming into the mainstream, even in banking, which is giving rise to other organisations and banks who are more understanding of these industries and hence are more capable of managing their risks.

“This isn’t necessarily a matter of money laundering – take filmmaking; see if any bank in Malta takes on a film production – they won’t because they don’t understand it. Look at Hollywood in America, they’re used to it and know risks and can weigh them accordingly. This is the same in cryptocurrencies or iGaming; those who understand and know what they have to do, go in for them”, he said.

Scicluna noted that seeing these new banks come in, understand these risks, and take these clients is the “only hope”, before once again emphasising that the government cannot intervene in what banks choose to do.

Malta Enterprise CEO Kurt Farrugia has called the decision by BOV “hasty” and “not well-communicated” but noted that it was part of a de-risking process that will ultimately create stronger and safer banks.

 

 

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