Malta Development Bank seeks more visibility as it approaches its seventh birthday

The Malta Development Bank has a “visibility deficit” it must address, according to its chairperson Leo Brincat.

In a frank admission during a business breakfast where the annual report for 2023 was presented, Brincat said he still met people in government who did not know what the MDB’s function is.

“The bank’s visibility has to increase; we cannot have people who come to us because they are the commercial banks’ bad debts and those who could do with support from us stay away because they do not know who we are and what we do,” Brincat said.

A former member of the European Court of Auditors, Brincat was appointed chairperson of the MDB in December last year.

Brincat noted that the MDB provided half-a-billion euros in support schemes during the COVID pandemic that enabled the economy to continue functioning at a time when commercial banks were hesitant to shoulder the risk.

The MDB was set up in 2017 by the government to fill in market gaps in the financial system through initiatives, which commercial banks might not be able to support on their own.

Brincat said the MDB’s vision was to complement the work of commercial banks and not compete with them.

“It is also our job to work with stakeholders to ensure that our schemes are tailored to needs of businesses,” he said.

The 2023 report lists two particular instances where the bank stepped in to assist two private technology companies invest in growing their businesses.

One of the companies is involved in the ride hailing industry and wanted to export the technology developed in-house to foreign markets, while the other wanted to develop an AI platform for the healthcare industry.

The MDB collectively sanctioned €12.1 million in support for these two companies and also acted as a guarantor for 60% of the risk carried by commercial banks.

MDB CEO Paul V. Azzopardi said the bank was not a venture capital fund and evaluated projects that were bankable. “We may take our time to carry out due diligence and assess the viability of projects but we do offer finance where no other credit institution bothers to step in or risk doing so alone,” he said.

The MDB also launched its strategy for the coming years, identifying the top priority areas where it will consider funding proposals. These include sustainable infrastructure, SMEs, technology, waste management, the blue economy and renewable energy production and efficiency.

In a short address at the end of the meeting, Finance Minister Clyde Caruana said that after a new European Commission is installed later this year, the country should knock on the door again to determine whether the MDB’s remit can be widened even further.

“In the coming months, I would like to see a reflection of where the bank wants to go and if it wants to do other things,” Caruana said, adding however that he did not want the MDB to become a competitor to commercial banks.

He praised the work done by the bank since its inception, particularly the support it gave the economy during the COVID pandemic.