'MFSA investigations prove claims of excessive bank interest rates' - GRTU

The GRTU has welcomed the conclusions of the investigation carried out by the Malta Financial Services Authority and the Malta Competition and Consumer Affairs Authority into local bank lending practices to businesses.

"This is a fight GRTU has led on its own for many years," it said in a press statement. "It is only just recently that GRTU's concerns were echoed by the European Commission and the Governor of the Central Bank of Malta and now the undeniably damning confirmation by the MFSA and the MCCAA through their report."

The GRTU has always maintained that commercial banks, as the only vehicles offering access to finance in Malta, had an obligation to enable local businesses to grow and compete.

"The banks however have for years been acting inconsiderately securing excessive profits in total disregard of the pressure they were putting on local businesses particularly SMEs. This is besides the prevailing trend for local banks to lend on "safe" products like home loans and personal credit in lieu of financing for local businesses."

Aside from acting greedily, the banks also pointed fingers, time and again, at businesses themselves, blaming them as the reason for expensive access to finance because of the risk they expose banks to.

"In businesses there is always risk but the bank is the only player in the equation that is invariably more than adequately covered for the worst case scenario. God forbid something goes wrong in your business and you found yourself at the mercy of the banks. 

"Maltese banks are so risk-averse that they do not even pursue balance sheet lending but demand excessive levels of liquid and illiquid security far in excess of their lending," the press statement reads. 

The banks also took their time in lowering their rates after the ECB announced interest cuts, passing on savings to businesses only after being put under pressure to do so, the GRTU said. 

The MFSA report also delves into the issue of bank charges. "Bank charges are grossly excessive and one of the major sources of income of banks, estimated at around 40% of total revenue. The Regulator rightly points out that there is no plausible reason to justify the level and even the existence of certain charges, mentioning in particular the charges imposed on retail outlets for using debit and credit cards on their EPOS machines.

"GRTU has been relentlessly arguing against this percentage charge that is so truly not based on actual transaction cost that it can be negotiated."

The association reiterated its committment to improving access to affordable finance, putting Malta's banking services on a par with EU counterparts and bringing interest rates in line with European averages. 

"For years, banks have been making exorbitant profits. GRTU does not expect local banks not to be profitable, however it condemns restrictive practices towards commercial lending and any potentially abusive practices should be subjected to the competence of local authorities like any other business would."