The local business community is facing widespread issues with banking, whose services and changes in systems have been described as “ridiculous” and “rubbish” by one of Malta’s leading business lobbies.

The Chamber of SMEs is doing its utmost to put the demand for better banking at the top of the national agenda, making the call front and centre of its Budget consultation feedback.

Speaking to, CEO Abigail Agius Mamo says that the SME Chamber receives “never ending” complaints about the inefficiencies of Malta’s banking system, which she says is made worse by the main players’ similarity in a market without effective competition.

Abigail Mamo portrait
Chamber of SMEs CEO Abigail Agius Mamo

“There is a lack of active competition,” she says. “The two main banks operate very similarly, if not the same, so there isn’t much choice. The banks therefore essentially have a carte blanche to do whatever they want, without consultation or any care for their clients.”

While companies operating in normal market conditions do their utmost to ensure their clients are served well in a bid to compete for market share, Malta’s banks, says Ms Agius Mamo, feel no need to do this, and don’t, assured as they are that their clients have nowhere else to turn to.

She brings up a recent notice by HSBC that non-clients can only be served on Fridays in relation to cheques.

“They don’t even conduct basic analysis into the expected impact of the changes they are implementing to make sure their users are comfortable.”

Malta’s largest bank, Bank of Valletta, holds a majority of the country’s deposits, issues the most loans, and has a larger branch network than all its competitors combined. This, explains Ms Agius Mamo, makes BOV the dominant player in the local banking sector. European Union competition rules place several limitations on the actions such dominant players can take, including on the unilateral raising of fees or changes to important procedures and services.

“They need to justify such increases or changes, and they need to consult widely. These things should go through the regulator, and the bank needs to present its case for any changes it wants to implement to show it has done its homework correctly. They cannot just have a hole in their accounts and decide to fill it by introducing new charges.”

Many businesses in fact report feeling that they are being “milked dry” to pay the very high wages reported in the media and the inefficiencies of systems “dating back to the dinosaurs”.

In fact, Ms Agius Mamo says that complaints about banks are “never ending”, as banks use their advantageous position vis-à-vis businesses to implement “unpleasant moves that are causing a lot of distress”.

“The trend is clear. Banks are reducing their services and raising fees. It’s a mess. There’s no interest or any kind of intent to see how users will experience changes. There’s no consultation to see whether the wholesale shift to digital banking can be effected by users who have not yet migrated online.

“Meanwhile, branches are being closed left and right, and long queues outside banks have become a common sight. The service has become ridiculous while fees continue to increase. It’s rubbish.”

She questions how doing away with laborious human resources-intensive procedures and going online somehow leads to increased costs. “It’s always a losing deal with these banks.”

Turning to possible solutions, Ms Agius Mamo says the launch of a Malta Enterprise initiative extending loans to businesses not usually supported by banks has made access to finance “a little bit easier”.

Meanwhile, the Malta Development Bank is carrying out a study to see how it could extend its scope, as the market failures it sought to address have only grown larger.

“The Malta Development Bank needs to grow to rise up to these challenges. It is still seeing how it can get there.”

As for the SME Chamber’s proposal to introduce a charter of banking services, including the setting up of a committee to analyse banks’ decisions to see how they impact their multitude of users, Ms Agius Mamo says that “unfortunately the Government has yet to take this up”.

She believes that Government support is crucial if the banking sector is to have any hope of meeting businesses’ needs.

“Malta is a small market. In our situation, Government has to intervene. It’s the only way.”


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