November 2013 saw the issue of the latest Banking Structures Report carried out by the European Central Bank, providing an overview of the main structural developments within the Euro area for the period covering 2008 up till the first half of 2013. Bearing in mind the economic climate at the departure point of this report, certain disappointing findings come as no surprise. On the other hand, Malta’s banking sector’s resilient performance seems to shine and cannot be overlooked.
Over the period in question, the Euro area experienced a net decrease of 191 credit institutions, with countries like Greece, Spain and Portugal suffering the greatest losses. This was not only the scenario in the aforementioned countries, where the recession was most heartfelt, but a decrease was in fact recorded in all euro countries except for Luxembourg and Malta.
When considering the resizing process, the Euro banking sector has had an overall decline of 11.6% since 2008, most of which taking place in 2009 as a result of the onset of the financial crisis. Here again we observe a great discrepancy between member states. Whereas the likes of Estonia and Ireland experienced drops of around 40%, Malta actually benefitted from a 22% growth in the total value of banking assets.
Malta prominently crops up once again when the report examines the size of the different euro banking sectors in relation to GDP. Finding itself in second place, and preceded only by Luxembourg, banking assets in Malta represent 789% of the GDP, a good percentage which are held by foreign-controlled subsidiaries and branches. One cannot fail to note that despite the majority of foreign-controlled assets, Malta also succeeded in experiencing a growth in domestic banking sector assets.
All in all Malta’s banking sector has therefore managed to uphold its credit institutions, increase its banking assets and maintain a healthy percentage of banking assets in relation to GDP. The report’s content and conclusions strengthen and reaffirm the fact that the Maltese banking sector has continued to flourish despite the odds being against it and the rest of Europe.