Evarist Bartolo insists MFSA chairman’s position ‘untenable’

Education Minister Evarist Bartolo is standing his ground over his criticism of MFSA chairman Joe Bannister, reiterating that his position was “untenable”.

Bartolo has for years accused Bannister of failing to declare a directorship in a Cayman Islands company in the Malta Financial Services Authority's annual report.

Bannister has repeatedly denied any conflict of interest as director of Kairos Fund. He has denied holding any funds in the Cayman Islands and insisted that “the matter was closed” following talks between then Prime Minister Lawrence Gonzi and Joseph Muscat, then leader of the opposition, five years ago.

However, Bartolo insists that it is unacceptable for Bannister to be the chairman of Malta’s single financial services regulator whilst holding the position of director Director of collective investment schemes in the Cayman.

As if Panamagate was not damaging enough for our financial services industry, now this. It's a disgrace. https://t.co/K9nXvXO72I

— Simon Busuttil (@SimonBusuttil) April 22, 2016

“In addition to the IMF this is also the position of the Basel Committee of Banking Supervision (BCBS) which is the primary global standard-setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters,” Bartolo said.

“The International financial institutions and the European Central Bank are therefore clear: being a director of collective investment schemes in Cayman is not compatible with the role of Chairman of Malta’s single financial services regulator.”

Citing the Basel Committee on Banking Supervision, Bartolo argued that that the supervisor should possesses operational independence, transparent processes, sound governance, budgetary processes that do not undermine autonomy and adequate resources, and is accountable for the discharge of its duties and use of its resources.

“For the BCBS operational independence means that there is amongst others no industry interference that compromises the operational independence of the supervisor,” the minister said on Facebook.

“This is also the position of the European Central Bank, which stipulates that the carrying out of supervisory tasks should be free from undue industry interference which would affect a supervisor’s operational independence.”

Bartolo went on to point out that Bannister has been the chairman of the MFSA for 20 years.

“This according to the European Central Bank may impinge on his independence from the industry,” he said, referring to regulations emanating from the Single Supervisory Mechanism. These stipulate that a chair’s term of office should not exceed five years and should not be renewable, allowing an appropriate rotation and ensure the full independence of the chair.

The regulations cited by Bartolo refer to the supervisory board of the ECB.

“Bannister has been Chairman four times more than what is accepted good practice by the ECB. Chairman Bannister’s position is untenable,” the minister said.

Bannister was reappointed to his post by this government in 2014.