German MEP wants HSBC to quit Malta over lax financial regulation

The Green MEP Sven Giegold said he could launch a damaging publicity campaign against HSBC’s presence in Malta, unless the Maltese government does not take more concrete action to tighten up financial regulations. 

“If I don’t see a change in attitude, backed up by demonstrable action, I will launch a campaign calling for HSBC to quit the island,” he told The Sunday Telegraph. 

His warning comes after an investigation into the MFSA by the European Banking Authority over its handling of the Pilatus Bank licensing, was closed because EU rules were too vague to conclude there had been “breaches of clear and unconditional obligations”. 

Giegold, who is part of the Panama Papers committee inthe European Parliament and has frequently called out Malta over its system of tax rebates for foreign shareholders, said he was left deeply dissatisfied by his recent visit to with other MEPs to assess the government’s willingness to address rule of law issues. 

“We had ridiculous meetings last week with MFSA, because despite all the supervisory failures of recent years they didn’t say they would change direction,” he said. “They were very much on the defensive and defended their approach, rather than announcing a stricter regulatory approach.” 

Giegold questioned Malta’s capacity to address issues raised by the EBA report, noting that despite a boost in staff levels in Malta’s economic crime unit from six to 16, only one of these staff had a degree-level qualification in finance. “Having staff doesn’t mean anything in the real world, the test is whether there will be more prosecutions and more economic crimes detected,” he added. “Will they clean up the sector by themselves and root out criminal money, or not?” 

The MEPs Rule of Law Monitoring Group has promised to release a report on its visit to Malta later this month. 

Malta only accounts for 0.3 per cent of HSBC profits but the bank is one of the two largest domestic core lenders. According to The Telegraph’s interview with Giegold, “MEPs and other activists intend to use Malta’s vulnerability to an HSBC exit as a lever to force the government to tighten up its approach to regulatory compliance issues.” 

According to a Bloomberg report, HSBC chief executive officer John Flint and chairman Mark Tucker were considering reducing the global footprint of the “world’s local bank” in a plan to be revealed in the next months. Bloomberg reported that Flint was reviewing as many as a quarter of the 67 countries the bank operates in, and mulling an exit or sale from smaller consumer operations such as Bermuda, Malta and Uruguay.  

HSBC itself was fined $1.9bn in 2012 on money laundering charges that saw it agree a five-year deferred prosecution agreement (DPA) with the US Department of Justice (DoJ) that ended in December last year.