So long, and thanks for all the profits...

If I were to place a bet on whether HSBC will stay or leave in the next five years… right now, I’d bet on ‘Leave’. Maybe not today, or tomorrow, or even the day after… but the timeline of recent events reveals only one general direction: and not just in Malta, either

I know it’s probably unwise to make comparisons between two entirely unrelated sectors like ‘aviation’ and ‘banking’… but… what the hell, wisdom is overrated anyway. So here goes.

Have you ever noticed a small discrepancy in the way Malta has traditionally approached its own homegrown varieties of both those industries? For instance: no one in his right mind would dispute that there is (and has always been) universal, cross-party consensus on the importance of retaining Air Malta as a national airline; and at a glance, recent events seem to spell out exactly why, too.

Be honest: would a low-cost airline like Ryanair or Easyjet ever operate emergency flights to ‘rescue’ stranded Maltese passengers, when major tour operators like Thomas Cook suddenly go bankrupt in mid-air?

No, of course not. Those are profit-driven companies that operate on a cost-cutting platform. As a rule, they will never do anything that serves any other purpose than maximising their own profits: least of all, ‘rescuing’ people whose lives and safety are not even their own responsibility to begin with.

Air Malta, however, operates on a different basis. As a national airline, it comes complete with a ‘national service ethos’ extending far beyond its own commercial exigencies. So, it not only runs off-schedule flights for all such eventualities… but it also operates loss-making routes that no other airline would even contemplate; while occasionally playing its own part in situations such as the 2011 mass-evacuations of Libya, etc., etc.

I don’t know about you, but I call that ‘service over and above the call of duty’, myself. And that’s not something you would ever realistically expect from any old private commercial airline (unless it’s owned by Bruce Dickinson, of course. But let’s not get side-tracked.)

So when it comes to saving Air Malta from bankruptcy, both Nationalist and Labour administrations have always agreed that a certain amount of ‘protectionism’ is justified. In different ways, both had tried to circumvent EU restrictions on State Aid; and both insist that Air Malta is an ‘asset of national strategic importance’, to be safeguarded at all costs.

Why, then, do we seem to have no interest whatsoever in protecting another asset of equal (if not even greater) ‘national strategic importance’: our banks… or at least, the banks we used to own, before we sold them all off to a bunch of mercenary, profit-driven corporations that clearly couldn’t give a toss about their own clients (still less Malta’s ‘national interest’)?

To my mind, the fact that we sold a valuable national asset like Mid Med Bank to HSBC should have been considered ‘scandalous’, regardless of the price of sale (which, at only 191 million euro, was already pretty scandalous in itself: given that HSBC generates an average of 40 million euro a year, and was therefore able to recoup its initial investment in around five years flat.)

Coupled with the government’s equally suspicious decision, in 1992, to sell off its remaining shares in Bank of Valletta, the 1999 sale of Mid Med effectively meant that Malta had willingly ceded all control of its own banking sector to foreign operators: entities which have no earthly reason under the sun to be concerned about the country’s economic well-being (except, of course, in the purely parasitic sense, whereby a healthy Maltese economy also translates into greater profit margins for themselves.)

It is for this reason, incidentally, that HSBC has so far resisted ever committing to a long-term presence in Malta. This week, its local CEO Andrew Beane was asked to make that commitment four times in a single press interview. To describe his answers as ‘evasive’ would be the understatement of the decade:

“I can only talk about the actions we are taking…”; “We never make long-dated strategic statements…”

You don’t exactly need to be a psychiatrist to interpret the subconscious message there. It translates roughly as: ‘Are you nuts? Of course, we’re not going to make any long-term commitment to remain in Malta. Why the bloody hell should we, anyway? We’re a bank, not a State-run charity organisation…”

And in all fairness to Mr Beane… he’s right, you know. It was, in fact, a silly question to ask even once, let alone four times on the trot. Why should a major international banking giant like HSBC give any form of assurance or guarantee to the people of Malta… when it has absolutely no obligation to do so, of any kind whatsoever?

The same question might, however, have made a little more sense had it been put to the chairman of Mid Med Bank before its sale…. or even BOV today…. or any bank owned by any Maltese shareholders… who, being Maltese, might actually give a toss about their own country’s long-term economic prospects.

But HSBC? Let’s face it: the Hong Kong and Shanghai Banking Corporation has about as much reason to feel any ‘commitment’ or ‘allegiance’ towards Malta, as the Kurds had in ‘helping out the Americans’ in Normandy, 1944. (Note: unless your name is Donald Trump, you’ll probably know that means ‘absolutely zilch’).

And besides: any decision to stay or leave is hardly going to be taken in the board-room of HSBC’s local headquarters in Qormi. It will be taken in the company’s global headquarters in London… which also means that it is not a decision that can even be influenced by the actions of any Maltese government.

Make no mistake: we’ve been shafted. In transferring ownership of Mid Med to HSBC, Malta also kissed goodbye to its only hope of ever securing a ‘long-term commitment’ of permanence from a bank… of the kind, incidentally, that we only seem interested in securing now (and not, for example, when we actually drew up the contract of sale in 1999.)

So it’s a little late in the day to be asking HSBC for ‘guarantees’, isn’t it?  And yet, ever since the announcement that it will be closing down eight of its most prominent High Street branches, that is the question that seems to be on everybody’s lips: ‘Will it stay, or will it go’?

Given the implications of the overall situation… I honestly think it’s the wrong question to be asking.  But let’s have a crack at it anyway.

If I were to place a bet on whether HSBC will stay or leave in the next five years… right now, I’d bet on ‘Leave’. Maybe not today, or tomorrow, or even the day after… but the timeline of recent events reveals only one general direction: and not just in Malta, either.

Globally, HSBC is winding down all its ‘consumer banking operations’: all part of a shift towards the vastly more profitable corporate and retail banking sectors (of which, I need hardly add, Malta’s markets are not exactly the biggest and most profitable in the world.)

And this, by the way, was reported by Bloomberg over a year ago, in April 2018. The story claimed that “HSBC Holdings Plc chief executive officer John Flint and chairman Mark Tucker were reviewing as many as a quarter of the 67 countries in which the bank operates”. The options were to exit or sell “smaller consumer operations such as Bermuda, Malta and Uruguay.”

This report was never denied by HSBC Malta: which limited its response to saying that “the bank would update investors at or before its first-half earnings.”

Erm… meaning what, exactly? Given that the same Bloomberg article reported a 19% decline in annual profits between 2016 and 2017 – and the ‘first-half earnings’ refer to 2018 – the only possible interpretation is that HSBC was waiting to see if this decline in profitability was just a random fluctuation, or the beginning of a sustained trend, before making its mind up one way or another.

With hindsight, we now know that HSBC’s profits for 2018 bounced back by 30%+. So whatever announcement the bank was planning for its investors could safely be put on hold.

Admittedly, none of this ‘proves’ that HSBC was actively contemplating pulling out of Malta, as recently as last year. But – to my mind, at least – it strongly suggests that the eventuality is something that HSBC does think about, probably all the time.

And all indications to date have been that… yes, under certain circumstances it would no doubt consider winding up its Malta operations (just like any other major profit-oriented corporation would do in its place).

These circumstances might include an economic slowdown (that may or may not be imminent, depending whom you ask); but there could be other factors also.

It was only a few months ago, for instance, that a German MEP named Sven Giegold declared he would ‘start a personal campaign’ to convince HSBC to withdraw from Malta, owing to our presumed ‘rule of law’ issues. And oh my, what a coincidence. Fast-forward just a few months, and HSBC suddenly announces the closure of eight of its major branches, all over Malta…

OK, OK, it probably really is just a coincidence… but that is beside the point, really. The really worrying thing is that our reliance on this one banking giant also makes us vulnerable to precisely the sort of blackmail employed by Giegold. ‘Want to hurt Malta economically? Easy-peasy. Just strike out at HSBC; then sit back and watch, while the entire Maltese population pleads for mercy like a bunch of frightened rabbits…’

And, what’s worse, this vulnerability of ours – this Achilles’ Heel, there for all the world to take as many pot-shots at as it likes – is a weakness that is entirely of our own making.

This, to me, is the real implication of HSBC’s ongoing downsizing operations. Simply put, we have lost our collective peace of mind regarding the stability of our country’s entire banking sector. For regardless whether HSBC chooses to stay or leave… we are still faced with the uncomfortable prospect that it could make that announcement any time it likes, and for (almost) any reason it chooses.

And we even can’t argue, because we ourselves were the ones who bargained away that right, when we sold off what was once our own ‘asset of national strategic importance’… to become someone else’s.

So the question I would be asking, at this stage, is: how on earth did we even get to such a point, where our own economic stability relies so utterly on decisions taken by outsiders… and over which we, as a country, have absolutely no control whatsoever?

I don’t know… but I’m sure glad as Hell that I’m not the one people might soon be turning to for an answer…

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