World Report

The Bank of Valletta looks to capitalize on the advantages of EU membership

The Bank of Valletta centre is a modern, environmentally-friendly and structurally efficient building which was officially inaugurated in February of 2006 by the Prime Minister, Dr. Lawrence Gonzi.

alta’s ongoing and successful development as a financial centre is based on various factors. First, it has human resources: a well-educated workforce with multi-lingual skills. Second, the liberalisation of the market and the convergence of Malta’s regulatory regime with that of the EU have led to an influx of financial services capital.

“Malta’s membership in the EU provides a good degree of comfort for potential investors,” says Tonio Depasquale, chief executive officer of Bank of Valletta (BOV), Malta’s largest bank in terms of balance sheet size. Despite increased competition from big-name foreign banks such as HSBC, BOV has maintained its market share. “We have the largest distribution network operated by a financial organization in Malta. We have the largest shareholder base, and we have a market share of close to 45 per cent,” he says. The bank is currently looking at a number of growth areas, including diversifying into insurance and other specialised services.

The transition to the euro, scheduled for January 2008, will entail costs to the bank, mostly related to updating IT systems. In addition, some of the profits generated from foreign exchange margins will be lost. But there are also significant advantages, says Mr Depasquale. With the euro as the official currency, the bank will have more opportunities and flexibility to invest excess liquidity, which should hopefully more than compensate for any income lost.

Tonio Depasquale
Bank of Valletta Chief Executive Officer

‘Malta’s membership in the EU provides a degree of comfort for potential investors’

The bank is facing full privatisation, as the government plans to divest itself of the remaining 25 per cent of its shares of the institution. Most opinions favour looking regionally for a strategic partner who can guarantee that the bank will remain a central player in Malta while becoming an important player in the Mediterranean, where the bank sees good future prospects.

The BOV recently hosted a conference on trade finance in the Mediterranean, calling for a strengthening of multilateral trading ties between the EU and individual Mediterranean countries, and the continued liberalisation of the services sector to enable smaller financial institutions to consolidate and support growing international and inter-regional trade.