To what extent can we trust Fitch’s report that the Maltese banks are not facing distress?
By Marica Micallef
A few days after this site published two blogs about the banking turmoil being witnessed abroad, the government responds through Times of Malta article of 25th March titled “Maltese banks face no immediate risks from global turmoil – Fitch.”
Because it happens that Fitch, a credit rating agency, has “coincidentally” released a report about the Maltese economical and financial situation on Friday 24th March, three days after the publishing of the blog about the SVB collapse and a day after the publishing of the blog about the Wells Fargo Bank.
Fitch said that “Maltese banks do not appear to be at any immediate risk from recent international turmoil”. What a contradiction! So, the turmoil is international but Malta is not part of this international scene. It is standing on its own, immersed in a unique solid base of drug dealing, money laundering, corruption, lobbying and free masonry. No wonder it always floats in a stormy sea.
Fitch “described liquidity levels in Malta’s banking as “exceptionally strong” and confirmed “Malta’s A+ credit score with a stable outlook”. To what extent can we trust Fitch’s report, being a credit rating agency itself? Wall Street Journal not only gives another picture but it had also added that “the Silicon Valley Bank’s distress wasn’t reflected in credit ratings”.
“Rapid collapses at Silicon Valley Bank and Signature Bank cast doubt on whether bondholders will ever be repaid. Uninsured depositors worried they would lose their money before regulators stepped in to guarantee these funds. When the banks failed, both had high marks from rating firms. Though Wall Street and regulators have also often struggled to predict meltdowns, the collapses marked the latest blemish for the firms’ track records for warning of financial distress.”
Fitch said that Malta will be well positioned to reduce public debt in the medium- to long-term without slashing expenditure or hiking taxes, IF it can grow the economy at a steady 3-4% per year.” And if it doesn’t?
What if instead of transferring all the chaos on the people, by slashing their expenditure and having them pay more taxes, the chaos is transferred on the Maltese rich cowboys, the lobbyists and politicians? They can sit together round the “tavola rotonda,” count their riches and with a monetary input from each, this debt will be sorted. Or they can ask BOV, or Steward Health Care, or the EU to pay for this debt.
Fitch’s report makes us think that Malta is a bed of roses. The economy is going fine. The lower classes and the middle classes are immune to the recession and that the Maltese nation won’t continue to be sold out while the omnipotent banks are bailed out.
However, “Fitch said that it would consider downgrading Malta if government debt continued on a clear upward trend or if it found evidence of further deterioration in governance or banking supervision or concerns of a lack of transparency across the broader financial sector.
It would consider upgrading Malta’s rating if debt trends down over the medium term or if further progress is registered in addressing key weaknesses in governance, banking supervision and the business environment.”
This recalls two financial crises: the American financial crisis of 2007–2008, which led to the Great Recession of 2007–2009, which has been called the worst global economic crisis since the Great Depression of 1929 and 1939. And that of Cyprus in 2012–2013, which involved the overleveraged property companies that Cypriot banks were exposed to, the Greek government debt crisis, the downgrading of the Cypriot government’s bond credit rating to junk status by international credit rating agencies, the ensuing inability to recover its state expenses from the international markets, and the government’s resistance to restructuring the troubled Cypriot financial sector. Is Fitch warning the government or the nation?
Either this report is full of sugar-coated bullshit to make you believe that Malta is immune to any global turmoil or any other crises which history showed can happen overnight or we can take it as truthful at face value.
The Maltese citizens have a right to know what is going on in foreign banks so that they choose what to do with THEIR money: withdraw it or use it in tangible assets.
Fitch and the government have two questions to answer: how can they further persuade the Maltese nation that Malta is walking on diamonds when BOV lost millions in euros in the corrupt deal of Steward Health Care and how can they explain the HSBC u-turn saga?