Clyde Caruana raises concerns over HSBC bids amid OTP and APS interest

Updated 11.10am with response from OTP

Finance Minister Clyde Caruana appeared to cast doubt on two of the known bids for the takeover of HSBC while responding to questions about the interest of a controversial Hungarian bank.

Malta needs “more banking competition, not less,” Caruana told Times of Malta, adding it was crucial for Malta to end up with a bank that has a “good reputation”.

On Wednesday, Times of Malta revealed that Hungarian bank OTP was among the frontrunners in the race to take over HSBC Malta’s operations, despite its chequered recent history.

In 2023, OTP was classified as an international sponsor of war by Ukraine’s National Anti-Corruption Agency (NACP), after the bank continued to operate in Russia in the aftermath of Russia’s invasion of Ukraine. 

The bank insists it has a reputation for "prudence and transparency" as the "leading banking group in Central and Eastern Europe".

The only other known bidder to date is a local player, APS Bank, which confirmed its interest in the deal late last year. It remains unclear whether HSBC has received other bids.

‘We all remember greylisting,’ Caruana warns

But, speaking on Wednesday, Caruana appeared to pour cold water over both options.

In a seemingly thinly veiled reference to the prospect of an APS takeover, Caruana insisted that Malta’s financial sector needs “more banking competition than exists today, not less”.

This echoes similar warnings by several financial experts in recent months, many of whom have questioned the wisdom of Malta replacing an international player like HSBC with a local operator.

But Caruana also sounded a word of warning over the prospect of a takeover by a bank with a less than stellar reputation.

“We all remember what this country went through during its greylisting,” Caruana said. “In recent years, we’ve strengthened our reputation, so I expect that ultimately Malta will have a financial institution with a good reputation.”

Does not rule out further intervention

Caruana didn’t rule out a more drastic intervention on the government’s behalf at some point in the future.

“For now I don’t feel the need to comment,” Caruana said when asked whether the government plans to intervene at this stage. “But that doesn’t mean that MFSA is not in dialogue with HSBC Continental.”

“But ultimately, there’s nothing holding me back if I feel the need to deliver some comments to safeguard the interests of our country’s financial sector,” Caruana warned.

Caruana declined to comment when asked whether MFSA and the European Central Bank, both of which would need to approve the deal, are likely to share his concerns.

“There can be concerns over everything and everyone, let’s let the process take its course,” he said. “Ultimately, we need to ensure that the banking sector is healthy and more competitive than today at the end of the process.”

'I will not speculate': Robert Abela

Speaking earlier in the day, Abela said that while he was not informed of ongoing negotiations, the European Central Bank would have the final say on the deal.

"I am sure that the ECB will ensure all the necessary safeguards before it approves any deal," Abela said.

"I will not speculate when there is nothing definitive; I will speak when there is something concrete," he added when asked about OTP's reputation.

In a statement on Wednesday, the OTP Group said it had been placed on the NACP list of international sponsors of war for "reasons that have been repeatedly and effectively refuted and proven to be completely false".

It said it was eventually removed from the list and that the bank strives to maintain professional relationships with all governments in the countries it operates.