Malta’s strong financial services sector and the role Bank of Valletta plays in the country’s development

This is truly a year of celebration for Malta, not just of how far you have come in the last 50 years but also that you are on a firm path for economic prosperity in the future. In a time of global economic recession, Malta is one of the fastest growing economies in Europe, with this fresh, new, ambitious government doubling the GDP growth in one year alone. What impact do the financial services sector and the Bank of Valletta have on this economic prosperity?

The Bank of Valletta was instrumental in helping the Maltese economy to transform itself from one that was based on military spending to one that has a good mix of economic activities including manufacturing, tourism and financial services. Like in every other economy there is constant change going on around us and we need to adapt to make sure that we remain competitive in what we do. We have a very open economy which means that we need to export goods and services to support our quality of life. So far we have done this quite successfully and I am sure we will continue to do so in the future.

In a challenging economic environment, Bank of Valletta has performed solidly, earning a hundred and sixteen million euro before tax profits last year, which represents a five percent increase from the year before. To what would you attribute this success?

I attribute our success to prudent banking practices that enable us to take on risk that we feel we can manage. We will continue to do so because we understand the obligations we have to support the Maltese economy - not just for the present but also for the future.

When you were appointed chairman you stated that it was a very challenging time for BOV. So, what were your top priorities then and how have they evolved during the year?

We need to strengthen our infrastructure to ensure that we are prepared for the challenges of the future. The Maltese banking market is very competitive. In the coming few years we need to invest heavily in information technology as well as in human resource to be able to offer our clients the best possible service. To do this we also need to strengthen our governance structures.

Why did you accept the position you currently hold? Was it the challenge?

I had worked at Bank of Valletta for almost 40 years.  When I retired, I dedicated myself to business education. When I was asked to lead BOV as a Chairman, I realised that this was a golden opportunity to help the Bank face the challenges of the future. My past knowledge of the Bank helps me understand what needs to be done to upgrade the service we give to the Maltese economy and to our clients.

So in terms of strategic long-term objectives, where do you see opportunities in the economy? I read the energy sector has a bright future. What do you think?

Malta has excellent competitive advantages because of its strategic position in the centre of the Mediterranean and the skills of many of our people. We need to exploit these opportunities. We have already struck a good deal with Chinese investors to upgrade our electricity infrastructure. We need to look for investment opportunities in the Gulf States, China and other non-traditional areas that offer promising prospects.

Bank of Valletta has been and continues to be a main driver of economic growth by investing in major infrastructure projects, such as the Freeport, as well as CSR initiatives. I read a quote in your most recent annual report that is very interesting: “CSR does not contradict the profitability motive”. So how do you balance the needs of the country with the needs of your shareholders?

Bank of Valletta is a local bank that has its roots in Maltese society. Although we are a business organisation that aims to maximise its profits for the benefit of the economy, shareholders, our clients and employees, we also believe that we need to plough back some of these profits for the good of society in general. We therefore support many activities aimed at enhancing the quality of life of our people who either need social support or are interested in the growth of cultural activities in our country. I believe we are striking the right balance between our business and social obligations.

Indeed in terms of investment Malta has been able to attract three times the amount of FDI in 2013 compared to the previous year. And this is coupled with a recent Ernst & Young study where they survey the top hundred domestic executives and a majority of them are reinvesting back into the economy. Why do you think Malta is such an attractive investment at this time?

One needs to examine what type of investment we are talking about. Some investment in financial services can be quite volatile as that is the nature of the industry. But we are also attracting good investment in other areas like the maritime sector, tourism and other services. We need to continue to diversify our economy to make it more robust when a downturn in one particular economic sector hits us. I believe that we are gradually achieving this.

On the 65th anniversary of the creation of the Commonwealth, many experts affirm that the influence of Britain on Malta has been positive. One of the reasons might be the Anglo-Saxon work ethics. Would you agree with this? How has that helped the attraction of investment to Malta?

I believe that the British rule in Malta has left considerable benefits. Perhaps the most obvious is our use of the English language which is the universal language of business. With regards to work ethics, I would like us to adopt more productive work ethics because in today’s harsh business world we need to compete on a global basis with very agile operators. So we have a lot of unfinished business to really feel justified in feeling happy about our work ethics.

Malta’s banking sector is very stable and solid, for many reasons. But do you feel the international perspective of this is accurate? Do you think there is more that could be done to improve the knowledge and understanding of the Maltese banking sector?

Local banks usually adopt rather conservative business models that have saved us from the need of taxpayers having to rescue any of our banks during the economic crisis. But we must not be complacent. We should become smarter in analysing and pricing risk so that we can support our customers better and support the growth of our economy.

This is a great description of Malta: “It is a country built by knights, handed down gentlemen to gentlemen. And in this year of celebrations, we are celebrating what it means to be Maltese”. So what does it mean to you to be Maltese?

I consider myself firstly as a family man, secondly as a proud Maltese, and thirdly as an equally proud European citizen. We have achieved a lot as a country since independence fifty years ago. But we must not be complacent because the world around us is changing very fast and no one owes us a living. I am sure Malta will continue to progress and improve the quality of life of its people.

If we were to come here in five years and interview you again, what accomplishments would you like to have completed as chairman of Bank of Valletta?

My vision is to see the Bank continuing to serve our customers and the economy in an even better way.  We need to work hard and invest in our people and in systems to achieve this. We have some great people working for the Bank and I am confident that we will achieve our objectives.