MLT FSA Banks and Covid-19 Support
On Nov. 22, MLT FSA warned banks as support measures phased out.
- MLT FSA is working closely with banks to ensure that they are able to recognize early warning signs of credit deterioration once Covid-19 support measures are phased out.
- A number of measures were introduced by MLT GVT to support real economy but these could be masking various credit risk problems that have developed during pandemic.
- MLT FSA is encouraging banks to be vigilant and to pick up any signs of distress as soon as possible, as this will raise chances of being able to find solutions for the client.
- During 2021, MLT FSA examined standards across the industry and identified good practice, but also areas where banks in Malta must improve to meet current standards.
- MLT FSA will assess approach taken by boards during 2022 supervisory assessments.
- The press release follows the publication of a circular dated Nov. 12, 2021, to banks.
- Banks also need to ensure the capital properly reflects the risks in their balance sheet.
- MLT FSA noted that all banks should be able to demonstrate that they had performed an affordability assessment, to ensure that any restructuring of the loan was viable.
- Additionally, MLT FSA suggested a number of areas that the boards and management of banks should focus on, including improving quality of data used to support credit.
- Also, the identification of credit problems earlier on via appropriate triggers, and to take a note of any concessions made to borrowers, to identify any credit deterioration.
- Banks should also not rely only on an annual review of a customer file to identify if any deterioration in credit quality has occurred but should be more proactive in this regard.
||Bank; CNSM; Corp
||PR 11/22/2021; Cir 11/12/2021; COVID-19
||Compliance; C-Suite; Exams; Financial; Legal; Market Conduct; Operations; Product Administration; Reporting; Risk; Suitability; Treasury
||Banking; Loan; Overdrafts; Securities
|Reg. Last Update
Last substantive update on 11/23/2021