The Maltese banking sector encompasses the Central Bank of Malta, the Malta Financial Services Authority and credit institutions (i.e. banks). A number of other non-bank financial institutions are also licensed to operate in Malta.
The Central Bank of Malta
The Central Bank of Malta is primarily responsible for maintaining price stability through the formulation and implementation of monetary policy. It is also responsible for the promotion of a sound financial system and orderly capital markets.
The Malta Financial Services Authority
On the 1st January 2002, the banking regulatory and supervisory function was transferred from the Central Bank of Malta to the then Malta Financial Services Centre. Subsequently, on the 1st October 2002, the MFSC became the Malta Financial Services Authority (MFSA) and assumed its full regulatory and supervisory powers as the single regulator for financial services in Malta, in terms of the Malta Financial Services Authority Act, 2002. Through this process the MFSA has become the unified regulator for all banking, investment and insurance businesses. The MFSA also houses Malta's Registry of Companies.
Credit institutions (i.e. banks) are regulated and supervised in terms of the Banking Act, 1994, together with a number of Banking Rules issued in terms of the same Act. The latter have the force of secondary legislation.
The principal business undertaken by credit institutions is the receipt of deposits and the granting of credit facilities. Additionally, they provide a wide range of financial services to their clients, including the provision of foreign exchange, trade finance, payment mechanisms, investment banking, fund management and administration, stockbroking services, etc.
A list of all the credit institutions which are currently licensed by the MFSA to operate in Malta is available on the MFSA’s website at www.mfsa.com.mt
The non-bank financial institutions are precluded from taking deposits or other repayable funds from the public to fund their activities. They are regulated by the Financial Institutions Act, 1994, which came into force in November of the same year. Their activities include factoring, money transmission services, issuing and administering means of payments, guarantees and commitments and foreign exchange.
A list of all the financial insititutions which are currently licensed by the MFSA to operate in Malta is available on the MFSA’s website at www.mfsa.com.mt
Cross Border Activities
Following Malta’s accession to the EU on 1st May 2004, the Malta Financial Services Authority received a number of notifications by credit institutions from the European Economic Area concerning the freedom of establishment and the freedom to provide services under the EU Directive 2000/12. These institutions notified their intent to provide services on a cross border basis from Malta. As at December 2009, a total of 209 institutions have given the due notification.
A credit institution which is licensed by the Central Bank in the Netherlands, Credit Europe Bank N.V., has established a branch in Malta, with the approval of the Malta Financial Services Authority, in terms of the European Passporting Rights for Credit Institutions Regulations, 2004.