In presenting the report, former assistant director of the International Monetary Fund Piero Ugolini said it highlighted significant improvements in the Malta Financial Services Authority’s overall compliance with the Basel Core Principles, largely thanks to its transposition of EU Directives, according to a report on the Malta Today website.
Ugolini had been involved with an IMF/World Bank team that conducted an earlier survey of Malta’s financial services sector in 2002/2003, and was one of three assessors who authored the one released today.
The Malta Financial Services Authority has posted the 217-page report on its website, and where it may be downloaded in pdf form here.
The Malta Today report quoted Malta prime minister Lawrence Gonzi as saying: "This independent assessment concludes that the MFSA is compliant with 20 principles and largely compliant with the five remaining principles; there are no instances where the MFSA is materially non-compliant or non-compliant."
In a section sub-headed “main findings of the 2010 Independent Assessment”, on page 33, the IMF report notes that these findings "[compare] favourably with the 2002/2003 [report], where the MFSA was ‘compliant’ with 11 principles, ‘largely compliant’ with 12 and ‘materially non-compliant’ with one."
Requested by MFSA
The report released today had been requested by the MFSA’s board of governors, in reponse to increased calls for transparency by financial services companies following the global financial crises. It was thought such an independent report would carry greater weight than an internal audit that had been scheduled to take place last year, according to an introductory note.
This is also why it was carried out "using the same format as the Financial Sector Assessment Programme [the 2002/2003 report]" and why it and all future assessments are being made public.
The report was unveiled in a public presentation this morning, attended by the Maltese prime minister and Ugolini as well as Malta’s minister for the economy finance and investment, Tonio Fenech.
The other assessors who contributed to the report were Richard Nun, the former deputy director of the Texas Banking/Finance Commission, who is now involved in banking supervision with the IMF and Centenial Group; and Michael Kehr, a senior adviser of international policy/affairs for the German Federal Financial Supervisory Authority, Bundesanstalt fur Finanzdienstleistungsaufsicht.
Reference principle |
Recommended action |
CP1 – Objectives, independence, powers, etcCP1.2 Independence, etc. |
Obligations arising from new/amended EU legislation, new regulatory requirements, and the need to increase the scope and frequency of on-site inspections will require additional staff. The MFSA should explore alternatives for recruiting and retaining well-qualified staff, particularly for the Banking Supervision Unit. |
CP 1.4 Legal powers |
The issue of monetary fines should be re-visited with the two-fold aim of (i) more explicitly defining the circumstances when fines will be applied and (ii) more closely linking the amounts of fines to the severity of the infraction |
CP 11 – Exposures to related parties |
Further consideration should be given to deducting the aggregate of connected party exposures from capital for capital adequacy calculations; also, an aggregate limit should be established, relative to capital, for the total of all exposures to all connected persons |
