Central Bank acting governor Alexander Demarco brushed off the prospect of BOV getting involved in a takeover of HSBC, indicating that CBM was opposed to the idea of local banks merging.
On Tuesday, a company statement issued by BOV confirmed reports that it had been approached by third parties to be included in a bid to take over HSBC Malta. The approach is believed to have been made by a group of local businesses who joined forces to bid for HSBC, only for some to get cold feet in recent weeks.
Finance Minister Clyde Caruana gave the news short shrift, using a football analogy to argue that competition does not increase when one team takes players from another.
Caruana had previously made similar comments when faced with the prospect of a takeover by another local bank - APS. APS eventually withdrew its bid, citing "confidential information external to the due diligence exercise”.
MUBE, the banking employees’ union, also appeared to be concerned by the news, saying on Tuesday it was “sceptical” of the prospect of local banks merging.
Echoing Caruana’s words, Demarco told Times of Malta that Malta’s banking sector needed "more competition, not less", adding that CBM would not look kindly on local banks merging.
“We agree that there needs to be more competition in the banking sector, not less,” Demarco said. “So we prefer that there is no consolidation between local banks.”
However, Demarco appeared relatively unconcerned about the impact of the sale on Malta’s economy, saying it was business as usual for HSBC and its customers.
“Selling a bank is not a simple process and takes time,” Demarco said when asked whether he was concerned about the impact of lengthy negotiations. “We’ve had similar processes of bank sales in the past and present, so it’s expected that things could take some time”.
“But we’re not seeing any impact on the economy. HSBC is a profitable bank, so changing ownership isn’t creating any uncertainty in the local economy,” Demarco added.
BOV’s statement marked the latest twist in a saga that is expected to be decided in the coming weeks.
With Hungarian bank OTP seemingly out of the running, a number of bidders appear to be vying for HSBC Group’s 70% stake in HSBC Malta.
Aside from the local consortium, the frontrunners include fintech company RS2 and two non-EU banks that have been in discussions with HSBC in recent months.