The recent days have seen the two main banks in Malta face serious difficulties while a third bank has announced it will not offer correspondent services to Maltese investors.
HSBC came up with a shock announcement that it will close eight branches as part of a plan to modernise the network. Most of the banks that will be closed are in areas of high population density and the announcement proved to be quite traumatic especially for the elderly who still tend to cash their pensions at the bank branches.
There will also be some job losses but these will be on a voluntary basis. As this paper reported last week, the bank is downsizing all over Europe as its top levels have found out that the costs of running the bank in Europe are far higher than the costs it incurs in Asia and want immediate remedial action.
Predictably, the announcement rekindled the opposition to HSBC coming to Malta there had been when Mid-Med Bank was sold to HSBC. Former Labour leader Alfred Sant, who had waged a hard campaign against the sale, and who had gone wound sticking protest notes to bank branches (much like Martin Luther sticking Protestant manifestos around Germany) said this downsizing proved that getting HSBC to Malta was a bad move.
Not so fast, Dr Sant. On the contrary, getting HSBC, a world leader, to Malta was one of the best moves Malta ever made and it may actually be that instead of selling Mid-Med to HSBC we should have actually paid HSBC to come over, seeing the benefits of having such a world-renowned name on our streets.
When people come to Malta and see the HSBC logo they immediately feel reassured, far more than they would have been if they had been faced by the Mid-Med logo (and that without finding out about the funny way Mid-Med handed out promotions and did business with cronies, such as taking on a nearby office block).
They must take us to be real simpletons or to have a short memory, which is probably why the key people involved in those events of long ago now appear with insouciance on television analysing the Budget as financial experts.
HSBC did its own de-risking exercise some months back and is now moving on. Bank of Valletta, on the contrary, seems to have had to be pushed and prodded by the ECB and other regulators and has now removed itself from carrying e-gaming business.
Apart from the consequences on the clients themselves, who are now trying to find alternative solutions, mainly outside Malta, this de-risking exercise seems to have been done quite suddenly, with no preparation at all. Maybe that is the reason for a certain confusion that was caused, with some media claiming that not all e-gaming companies will be targeted, and later having to withdraw this claim.
Thirdly, Deutsche Bank confirmed it is pulling the plug on its correspondent banking services to local financial institutions, making it more difficult for them to offer dollar-denominated transactions.
The bank has regulatory troubles of its own and regularly reviews its correspondent banking services but it must be clear to all that Malta's reputational problems in recent times must have had an impact as well. The birds have come home to roost.
Sometimes we get reports, or we get government ministers telling us, that new banks are coming. We have not been particularly lucky with some of the recent additions to the Maltese banking scene, with the likes of Pilatus Bank and Satabank, so our appeal to the regulatory authorities is to urge them to do their work properly and possibly without succumbing to pressures.