I’m very glad that the Hungarian laundromat of Russia, OTP Bank submitted a bid for HSCB Malta. We had confirmed that a foreign entity submitted a bid for HSBC Malta but we couldn’t yet confirm a name. Times of Malta confirmed it before us.
OTP is not going to get accepted by the Maltese regulator, neither by the Central Bank nor by the Malta Financial Services Authority. Its bid is also going to be instantly blocked by the FIAU over security and risk reasons. There won’t be a lot of discussion about it.
Malta is indeed becoming a criminal paradise, but one of the areas which the Labour government has yet failed to hijack fully are the FIAU and the banking and financial regulators. We have financial and banking regulators and bureaucrats who are more conservative than our grand-mothers who wouldn’t dare to take strategic risks in the local banking sector. OTP Bank is undeniably a massive security, financial and reputational risk not only for Malta’s banking sector but for all of the economy. We would risk of having Hungary, the poorest country in the EU, turning us into a Mediterranean Venezuela.
In addition, with a market capitalisation of just €17.5 billion, the bank will have a very hard time convincing the regulator it is worth considering. Most probably the regulator’s standards in this case are so strict and conservative that they won’t even accept foreign bids by small banks, even if the bank has a good reputation. Most probably, the only bids by small banks that the regulator would consider would be restricted to local banks.
This is just my personal assessment judging by what I know of the local banking regulators. Malta has a very conservative banking regime and this is not going to change overnight. No one will be enticed with a bid that comes in the form of a highly explosive landmine, let alone our grand-mother-like banking regulators.
What I find good in this situation is that it brings more evidence on how Malta is exposed to Russian money-laundering and sanction-breaking. One of Europe’s last-standing banks in Russia wants a major presence and this shows us that Europeans who do intensive business with the Russians, irrespective of sanctions, law and politics, are interested in expanding their activity and business in Malta. The very fact alone that OTP Bank submitted a bid for HSBC Malta, is already very harmful to our reputation.
Update: It’s hilarious that as I was writing this article, the Times of Malta published comments by the Minister for Finance, basically saying very similar things.
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