Tista' taqra bil- Malti.
Following the report that Deutsche Bank will end its correspondent banking services to Bank of Valletta, it has now been revealed that there could be other banks taking similar measures.
On Saturday it was reported by Times of Malta that Deutsche Bank would be ending its correspondent bank services to Malta’s national bank by the end of December this year.
According to the German newspaper Süddeutsche Zeitung, business between Malta and Deutsche Bank has been very delicate, prompting other banks to also leave.
Süddeutsche Zeitung had been the first newspaper to publish documents in connection with the Panama Papers, a scandal that has included key members of the current Labour administration including Tourism Minister Konrad Mizzi and the Prime Minister’s Chief of Staff Keith Schembri. Both have repeatedly said they are innocent.
The German newspaper says that what happened, could be a fatal harbinger of Malta’s future.
Two Maltese economists weighed in on the news about Deutsche Bank. They explained that Deutsche Bank will stop its services in Malta because there is a risk which they are no longer ready to take.
What is a correspondent bank?
Correspondent banks are banks that offer transactions in dollars and other currencies on behalf of local banks.
When a Maltese importer buys goods from America or other countries, they will generally pay in dollars. Due to Malta using the Euro, the importer will use a local bank to convert money from Euros to, say, US dollars. Local banks will use ‘correspondent banks’ in order to make the transactions in US dollars.
If a bank like Deutsche Bank ceased operations in Malta, such transactions will stop.