The European Commission Provides Positive Feedback on the Relationship Between Malta’s Banking Sector and the Economy
News    ·   23-04-2013

AUTHOR: Andrei Vella, Louis de Gabriele

On the 10th April 2013 the European Commission issued its in-depth review for Malta in accordance with article 5 of EU Regulation 1176/2011.

Whilst touching on a number of issues, including private sector indebtedness and government debt, the report encouragingly underlines the resilience shown by Malta’s economy throughout the crisis and also forecasts an acceleration in economic growth in 2013-2014. Dovetailing such positive feedback, the report mentions how Malta’s core domestic banks do not appear to be exposed to the volatility on the international financial markets. In reaching such conclusion the report examines how two of the group of core domestic banks own 80% of the 220% of GDP of total assets held by this core group of banks. The report also highlights how such banks have a very limited exposure to non-Maltese sovereign debt thereby further ring-fencing Malta from severe international market fluctuations. Whilst pointing out that international banks (as opposed to the core banks) hold a relatively higher percentage of assets of the GDP, the report mentions how such banks carry out little or no transactions in Malta thereby further limiting the potential risk to domestic financial stability that they carry.

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