Jānis Zelmenis


3 April, 2013

The Maltese government has declared that the island's banking sector remains "robust and stable" in the wake of fresh doubts emanating from its large financial services sector, due to the risk of contagion from the Cypriot crisis across the Mediterranean sea.Malta, a eurozone member since 2008, forms parts of the regulatory and supervisory framework that stress-tests important banks, and which submits the national financial regulatory and supervisory system to assessments by international organisations including the EU and the IMF.

The government said that size of Malta's domestic banking system is at present below the euro area average. "Malta supports the argument of the Luxembourg government that the banking system of an EU member state, being part of the single market and, subsequently, of a developing banking union, cannot be regarded in isolation. Malta forms an integral part of the euro area financial system," the Maltese government said in a statement.  Malta supports the adjustment programmes required by member states to re-establish financial stability, as well as the one-off measures undertaken with regards to Cyprus.

"The Euro Group's statement of 25 March concerning Cyprus calls for the downsizing of its domestic banking sector to reach the euro area average by 2018.  The size of Malta's domestic banking system is at present below the euro area average. The five domestically-oriented banks have total assets of 218% of gross domestic product, while the eight banks with limited links to the domestic market have assets totalling 77% of GDP. The rest of Malta's banking sector is made up of 14 international banks with no links to the domestic economy, with assets totalling 494% of GDP."

Altogether, Malta's total banking sector is eight times the size o the island's gross domestic product.

"Moreover, the asset holding of the total banking sector is well diversified and with very limited exposure to the programme countries.  The World Economic Forum ranks Malta 13th out of 144 countries in terms of the soundness of its banking sector. The banking system has strong solvency ratios.  It is also well capitalised with an overall capital adequacy ratio above 50%, exceeding significantly the minimum regulatory requirement of 8% under the Capital Requirement Directive," the government said.

Source Maltatoday.com