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Scicluna says Le Monde’s hack job of Natixis report ‘sensationalist’
‘Malta is not Cyprus’, says Natixis but Le Monde claims Malta ‘could be next detonator of European crisis’
3 May 2013, 12:00am
Matthew Vella
Matthew Vella
3 min read
Its a load of taureau Scicluna on Le Monde report
French newspaper Le Monde was accused of sensationalism by Malta's finance minister Edward Scicluna, after apparently misrepresenting a Natixis comparison of Maltese and Cypriot banks by claiming that Malta could be the source of a new crisis.
While the French investment bank's report claimed outright that Malta "was not Cyprus" and that its 'non-core' and foreign banks were not carriers of risk, Le Monde's reading of the report overturned the verdict, headlining its article with portentous tone: 'Malta, next detonator for a European crisis?'
READ Natixis: Are Maltese banks risk-carriers? [French]
Sounds ominous, but Natixis's conclusion is clear enough: international banks in Malta are not carriers of risk, Maltese domestic banks - like Bank of Valletta, HSBC Malta, APS, Banif and Lombard Bank - are well capitalised, and though remaining exposed to the credit extended to a dampened construction and property sector, the country's sound fundamentals make up for this apparent risk.
"The risk of contagion from non-resident deposits after the Cypriot episode is counterbalanced by the fact that the non-resident deposits are essentially those of international banks' parent companies. Finally, the relative confidence that Malta enjoys in the markets does not sound unjustified."
Not so Le Monde, which latched on the similarities between the two islands: small, open economy, a fast expansion of the financial services system, and an accommodating fiscal system that attracts much offshore business. With its banking sector at some eight times the size of Malta's GDP, this would be "too big to save" if the sovereign had to intervene and bail out the banks.
"It is quite unfortunate that another sensational article has found its way, this time, into Le Monde," said finance minister Edward Scicluna, who said the article's slant and speculative headline were "completely devoid of the truth... more authoritative bodies that have carried out serious and close evaluations of the Maltese banking sector have concluded the opposite."
Far from it, Natixis cautions its readers "not to force the comparison" between Malta and Cyprus: the greater part of Malta's banks is firmly compartmentalised between core banks like BOV and HSBC Malta, non-core banks like Volksbank and FIMBank, and international banks like Garanti of Turkey. While the Bank of Cyprus and Laiki represented 55% of the Cypriot banking sector and 400% of GDP, Malta's domestic banks represent 222% of GDP.
Even then, the international banks - 500% of GDP - are not carriers of risk. An important rejoinder would be Standard & Poor's recent reminder that the two islands were incomparable. Malta would only have to support banks that take deposits and lend domestically - international banks like Akbank and Garanti use Malta as a booking centre for foreign-exchange loans, but do not take local deposits or lend to Maltese residents.
So hypothetically, if a Turkish bank had to cease operations the result would likely be "at worst a minor shock to the economy and nothing like recent events in Cyprus". Even if HSBC Malta finds itself in difficulty, it would be its UK parent, HSBC Bank plc - which has a higher credit rating than the Republic of Malta - that would likely extend assistance.
"The Maltese banking sector is fundamentally different from that of Cyprus," Scicluna said. "We need only refer to the numerous following recent post-Cyprus crises studies on Malta as proof of this, and of the stability of Malta's banking sector. Among them, there are the reports issued by the Malta Central Bank, Bloomberg News Service, credit rating agencies Fitch and Standard & Poor's, and the conclusions of the European Commission's In-Depth Review for Malta, which have all underlined the inherent differences between Cyprus' and Malta's respective banking sectors, and that there is no risk of contagion from the Cypriot crisis."
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
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Le Monde a rightist media giving a helping hand to the local faccists.
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Skocciz, that is a wild idea and totally inappropriate. The Mintoff years ended in the international press for very valid reasons that had to do with the survival of democracy and human rights in Malta, all of which were under severe threat, perhaps not by Mintoff himself, but certainly by many of the people surrounding him. Nothing similar is happening now, and neither will it, because our democracy has matured thanks to two decades of stability and tranquility. What is certain is that their are currents in Europe that aim to destroy smaller financial services jurisdictions in a protectionist drive to capture as much capital to the banking systems of the larger jurisdictions. This should be resisted and countered by positive messages from the smaller EU jurisdictions.
Emmanuel Mallia •
I begin to wonder ! Is this economic crises Franco-German orchestrated ?
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We should not worry too much about these often uninformed reports because often they are based on incomplete information garnered from here and there and possibly some loose talk by Maltese or others with a hidden agenda. Even the respected financial media and journals often get it wrong as they have missed most of the banking and country crises until they actually exploded. Rather than concern himself with such economics doom and gloom reports and therefore raise suspicion of a possible cover up or lack of transparency we should put our efforts in sending a constant positive financial message and highlight to the world media or successes compared to other centres. Let us remember that often compilers of such reports are closely connected with financial and banking interests in their own country.
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yes IT IS MY OPINION THAT MALTA IS NEXT, AND WE CAN ALL SEE THIS ON THE WAY HSBC AND BANK OF VALLETTA HAVE KEPT AND PUT FURTHER RISTRICTIONS ON LOANS FOR PROPERTY AND FOR CARS. ANY PRIME MINISTER CAN PERSUAD PEOPLE TO BUY AND BUILD PROPERTIES BUT AT THE END OF THE DAY ITS THE BANKS THAT TALK BECAUSE THAT IS WERE ALL THE MONEY IS COMMING FROM. GONZI LIED FOR YEARS WHEN HE SAID THE EU IS FUNDING MALTA IN EVERY WAY, AND WHAT DO WE HEAR NOW, THAT GONZI NEVER SAID... LOANS FROM HSBC FOR AIRMALTA, SCHOOLS, ENEMALTA OVER 800 MILLION IN ERRORS, AND WHAT ARE THE POLITICIONS MAKING THE MALTESE PEOPLE THINK THAT EVERYTHING IS BRIGHT AND OK!! THINK!! LOOK AT YOUR POCKETS, CHECK THE STRENGHT OF YOUR BUSINESS, ARE YOU IN THE SAME POSITION YOIU WERE TEN YEARS AGO FINANCIALLY? WALK THROUGH THE STREETS OF BUGIBBA THIS SUMMER AND SEE AND HEAR THE QUIETNESS LIKE NEVER BEFORE...YES IT WILL HIT MALTA AND VERY SOON, UNLESS JOSEPH MAKES A MIRACLE WHICH IN MY OPINION YES HE CAN, ONLY IF HE OPENS THE MALTESE BORDERS TO SOUTH AFRICA STRAIGHT AWAY. PGAFFIERO DISTRIBUTORS(PTY)LIMITED SOUTH AFRICA.
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Sir Winston Churchill used to tell Hitler that Malta is an unsinkable aircraft carrier "AND SHE IS".
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Strange how articles like these and others on hunting are finding their way into the international press. Something which has not happened for the past quarter of a century. The last time that bad international press hit Malta was when Eddie Fenech Adami was leader of the opposition in the 1980s. At the time Malta used to face weekly bad publicity from foreign journalists instigated by locals who later ended up to be Eddie Fenech Adami's cronies as they were appointed in high positions within his administrations including ambassadorial posts. Is it an issue of history repeating itself?
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Minister Scicluna is absolutely right to highlight what appears to be a clearly malicious attempt by Le Monde to cast a shadow on Malta. However this is the media reality we live in today. Sensationalism sells, and any attempt to regulate that will be interpreted, also in a sensationalistic manner, as a threat to freedom of expression. Of course the best road is somewhere in between, but to identify that road and implement it is close to impossible....at least as far as I can see. Perhaps the best way to combat this sort of mud-slinging is by going out there with a positive message about Malta and targeting objective media coverage in a structured manner. The industry would be all for it and we will lend a hand...of that the Minister should be certain. Of course everything costs money, but it is a wise investment, as to do nothing could backfire. The Minister wisely set the pace in this respect.
