In the latest episode of the 'Ganado Meets Finance' podcast, Conrad Portanier, partner at Ganado Advocates, speaks with Karol Gabarretta, Secretary General of the Malta Bankers' Association, on the role and recent initiatives of the Malta Bankers' Association.
An Introduction to the MBA
The Malta Bankers' Association (MBA) established in 1962 serves as a representative body for banks which are licensed to carry out business in Malta. Presently, the MBA comprises twenty members, including three branches, one of which is an EU institution. The MBA's mission essentially is to promote and facilitate a conducive environment for the banking sector through advocacy, education, and capacity building.
Through his extensive experience within the Maltese banking sector, including occupation of pivotal roles at the Central Bank of Malta (CBM) as well as his tenure as Director of Banking Supervision at the MFSA, Mr. Karol Gabarretta gives his overview of the possibilities, functions, and initiatives of the MBA regarding the development of current issues such as the digitalisation, financial literacy, and other concerns faced within the banking sector.
The Role and Functions of the MBA
Forum for Expression
Firstly, Mr. Gabarretta emphasises that the role of the MBA is not merely one of assisting and facilitating interaction between its members, but it also serves as a forum for the formulation and expression of opinions and policy positions that reflect the concerns of the majority of members of the banking sector vis-à-vis any potential legislative instruments, requirements, and regulations.
Educational and Social Purpose
As part of its objectives the MBA strives to also enhance financial literacy within Malta, an area which it has been extremely active in. Such enhancement derives from the participation and creation of financial literacy programmes together with various partners such as the Education Department and NGOs such as ĠEMMA and JAE generally coinciding with European Money Week and Global Money Week. Furthermore, the MBA for the last four years has organised and funded a Malta Money Quiz which selects two students who represent Malta within the European Money Quiz (EMQ) hosted annually by the European Banking Federation (EBF).
The MBA as a Member of the EBF
The European Banking Federation (EBF) is an association representing national banking associations in countries of the European Union and the European Free Trade Association. Mr. Gabarretta highlights that the MBA is a full member of the EBF and regularly participates in EBF meetings both at a technical level within committees and working groups organised by the federation as well as at a governance level. In fact, he represents the MBA on the Executive Committee of the EBF while, the former chairman of the MBA, Mr. Marcel Cassar represented the MBA on the Board of the EBF. Today the newly elected Chair of the MBA, Mr Kenneth Farrugia, CEO of BOV, is the MBA's representative on the EBF's Board.
The MBA's participation within this well-regarded forum provides an international dimension to its work and objectives and allows for a better understanding of the European wide standards and practices being reached and implemented within the international banking sector.
Major Initiatives and Focus Areas
Restructuring of the MBA's Governance Framework
In 2023 the MBA saw the roll-out of its internal restructuring project both from a technical as well as governance perspective. The Board in light of such restructuring set up six standing committees which it felt encompassed the main interests and challenges faced locally by the banking sector, these including, (i) technology, innovation, and digitalisation (ii) consumer affairs, education, and communications (iii) ESG, sustainability and economic development (iv) accounting and financial reporting, (v) prudential policy, regulation, and supervision, (vi) financial and cybercrime, and fraud. Conrad Portanier highlighted the crucial importance of each and every sector to the banking sector, describing each concern as a minefield due to the technicalities posed by these areas.
Tackling the New Age of Technology and Cybercrime
Throughout the years, sectors including but not limited to the banking sector, had to evolve with the new age of technology and digitalisation, especially due to increase in cybercrime and scams over the years. The MBA aims to assist in tackling such challenges through increasing education and awareness, this including participation in TV programmes to highlight to the general public the dangers arising from fraud and scams in the new age of banking and financial services. These initiatives are in line with the nationwide project headed by the Malta Police Force (MPF) which has brought together various entities, one of which is the MBA, to tackle this growing concern,.
The World of Instant Payments and Digital Euro
Other areas which the MBA has spotlighted throughout the years is the evolving area of instant payments and digital euro, Mr. Gabarretta highlights the nature of such payments and emphasises the importance of not compartmentalising their interpretation. This is because while these facets of banking may focus on technology and digitalisation, there are other aspects which may fall under the element of prudential policy and which may affect the sector from a financial crime perspective. Furthermore, the MBA has collaborated with the Central Bank of Malta which has set up working groups for banks and financial institutions, to discuss and analyse the implementation of an instant payments framework within the Maltese banking sector.
In terms of digital euro, Mr. Gabarretta expresses the enhanced efforts of the MBA to understand further and better the implications on Malta's banking sector prior to the introduction of this element . The MBA has thus expressed its concerns and provided due feedback to the EU Commission on the impact of the digital euro on domestic banks.
The Nature of the Board of Directors and Non-Executive Directors
Dr. Portanier notes the constant revision and implementation of measures and regulations which banks are being faced with as an "avalanche" of legislation and obligations, accountability of which vests in the Board of Directors. Furthermore, great attention has been given by the MBA regarding the focus of this essential role which non-executive directors play especially due to the increasing technical nature of the material brought before the Board of Directors. Mr. Gabarretta underscores the focus drawn by the MBA towards the suitability and capabilities of non-executive directors, and states that it is pivotal that individuals occupying such position are to bring something of sufficient specialisation to the table due to the increasing technical nature. In light of this issue the MBA had a year ago partnered with the Institute of Financial Services (Malta) and organised a two-day training programme specifically targeted at the non-executive directors of banks.
Additionally, Mr. Gabarretta notes that, naturally one cannot be technically competent in all areas and such fact proves the importance of a diverse board composition and a careful and comprehensive selection process. It is crucial for a functioning Board of Directors to have people which possess a sufficiently comprehensive mix of skills. The importance of this characteristic has been at the heart of recent EU legislation such as the various iterations of the Capital Requirements Directive (CRD).
Conclusion
It is clear that the Malta Bankers' Association play a crucial role in not only representing and supporting Malta's banking sector, but also takes on a social and educational role within Maltese society through the creation of educational programmes, forums, outreach sessions and working groups. The MBA have also heavily contributed to the challenges faced by banks and consumers, and overall assumed a proactive approach, positioning itself as a key component in Malta's banking sector.
This article was first published in the Times of Malta on 11/08/2024 and was co-authored by Elena Sissons (Student Intern, Ganado Advocates).
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