Edward Scicluna

“All bank depositors must be protected”

On the eve of the European Council, the Minister for Finance, Professor Edward Scicluna, took part in an extraordinary meeting of the Economic and Financial Affairs Council (ECOFIN) which managed to reach an agreement on the proposed Banking Recovery and Resolution Directive. This meeting was a continuation of the long but inconclusive meeting of EU Finance Ministers that took place between 21 and 22 June in Luxembourg.

Following Malta’s and other countries’ request to the granting of more flexibility to the national authorities during the recovery and resolution of failing banks, Minister Scicluna showed satisfaction that the Presidency’s compromise addressed this issue.

 

 

Although this flexibility had to be constrained by a number of conditions, these were generally acceptable to Malta.

Prof. Scicluna stated “Our aim behind this flexibility was ultimately to protect all bank depositors, whether these are insured or uninsured. In the latter case, Maltese bank deposit accounts include those belonging to small and medium enterprises which are the back bone of the Maltese economy. We cannot afford to let these go under in any circumstance.”

The agreement on the Banking Recovery and Resolution Framework means that the Irish Presidency of the Council of the European Union (to be taken over by Lithuania on 1 July) can now start negotiations with the European Parliament.

The proposal would also require financial institutions to draw up recovery plans in which they would set out the measures they would take to restore their respective financial positions in the event of a significant deterioration. Banks will be asked to make provisions for a resolution fund, in addition to a depositor guarantee scheme, that would enable the provision of the required financial shortfalls in such an event. Lastly the European Stability Mechanism, of which Malta is a shareholder, would provide the final backstop to recapitalise the troubled bank in the euro area.

At the same time, the national authorities would have the power to appoint special managers to oversee the implementation of resolution measures of financial institutions should their financial situation deteriorate significantly.

Minister Scicluna was accompanied by Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, and the Permanent Secretary in the Ministry for Finance, Mr. Alfred Camilleri.

 

govmt_logo

newsbook_logo  maltaindependent_logo   gozonews

 

– Thursday, 28th June, 2013

author_pc

,

769 responses to ““All bank depositors must be protected””

Leave a Reply

Your email address will not be published. Required fields are marked *