News | Wednesday, 01 October 2008

BOV Chief warns that global banking crisis could have fall-out on Maltese economy

Charlot Zahra

In an extensive interview with Business Today (Page 10), the first one since the Lehman brothers’ bankruptcy was announced some weeks ago, Bank of Valletta (BOV) Chief Executive Officer (CEO) Tonio Depasquale said that the Maltese economy might be hit eventually by the fall-out from the global banking crisis.
He said that as a Maltese bank, the current international situation did not affect BOV directly. “We were affected mostly through mark-downs of our investments. The Bank has a debt portfolio that is well diversified into a number of blue chip names, mainly with a short duration.”
However, he warned of dire consequences if the financial crisis that is affecting the financial sector in the US, the UK, Europe and Asia spills over to those economies.
“As soon as the crisis in ‘Wall Street starts hitting Main Street’, then all economies around the world will be affected and the Maltese economy is no exception since we are operating in a global market,” Depasquale insisted.
For instance, the UK would be facing a recession by the end on the year. “Forty per cent of our market share in tourism comes from the UK. If the reduction in market share affects the Maltese economy, then the banking sector in Malta will be affected as well.
“In a globalised world, nobody is immune to what happens in other countries,” Depasquale told Business Today.
In addition, everybody had to reduce his economic forecasts for this year and next year’s, both in Europe as well as in the US. “Obviously this will have an effect on the economy as well as on the banking sector.
“Until now, the Maltese economy has been resilient enough to the international shocks. However, I do not believe that we will not be hit by the negative effects of the global economic fall-out,” Depasquale insisted.

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