For years, HSBC Malta has been reassuring its customers that it is going to stay put in the country, but a new company announcement has cast its future in serious doubt.

That HSBC has been quietly chipping away at its European operations and pivoting towards growing its presence in Asia is no secret.

Reports last year revealed that it would be selling or drastically streamlining its presence in 12 European countries, effectively slashing a fifth of its operations.

Sales across several countries followed, from France to Greece to Russia.

Malta had long been rumoured to be on the chopping block, a suggestion frequently dismissed by HSBC Malta.

HSBC is in Malta “for the long run”, HSBC Malta CEO Geoffrey Fichte told Times of Malta just eight months ago.

“I could speak until I’m blue in the face but you just need to look at what we’re doing in Malta,” he said, pointing to the company’s new €30m headquarters, when asked whether the bank is looking for an escape route.

HSBC Malta Geoffrey Fichte speaking to Times of Malta earlier this year. File photo: Chris Sant Fournier

The bank's announcement on the stock exchange that "it will undertake a strategic review" indicates a change of mind. 

But the signs had been piling up for some time.

In October 2019, the bank shut down several of its branches and ATMs across the island, from Ħamrun to St Julian’s and Marsascala, ostensibly to “focus on digital banking services”.

One month later, the bank announced it would shed 180 of its workers in a €16m voluntary redundancy scheme.

A 2020 Financial Times report suggesting that the bank was looking into whether to sell or shutter its operations across several of its smaller markets, including Malta, was met with silence, with the bank simply saying that its policy was “not to comment on speculative stories”.

Wednesday’s announcement marks a clear change of tone. Although the bank’s statement stops short of tracing the bank’s plans in Malta, it is the first admission that there could be cracks in the armour, which could widen once the bank’s “strategic review” is completed.

Controversial Mid-Med Bank takeover

It remains to be seen whether the strategic review will bring  HSBC Malta’s almost quarter-century presence in Malta to an end.

The bank’s introduction to Malta on the eve of the millenium was no less controversial. On 2 June 1999, the Maltese government handed over its 67.1% stake in Mid-Med Bank to Midland Bank PLC, a member of the HSBC group.

HSBC took over from Mid-Med Bank in June 1999.

The Lm91 million (roughly €191m) deal, brokered by then-Finance minister John Dalli, was widely seen to come short of the bank’s true value, with the government’s move harshly criticised by the opposition and bankers.

Then-opposition leader Alfred Sant called for Dalli’s resignation, arguing that Mid-Med Bank’s sale should have been opened up to offers from other potential buyers. Meanwhile, Mid-Med Bank’s former chair, Alfred Mifsud, insisted that the bank had been sold for well under its true value.

The takeover quickly proved controversial.

The sale also included the only painting of Malta by one of England’s most beloved Romantic painter, J.M.W. Turner, which had been recently purchased by Mid-Med Bank.

The painting, depicting Malta’s Grand Harbour, was eventually loaned to the Museum of Fine Arts and remains at MUŻA  on a permanent loan from HSBC.

But, Dalli rebutted, HSBC’s introduction to Malta would place Malta “more securely on the international financial map” and bring about “a quantum leap in the the banking sector in Malta”.

Meanwhile, HSBC Malta’s profits soared by 30% each year, rising from €32m in 2000, its first full year in Malta, to almost €120m in the span of just a handful of years.

The bank reported profits of €134m last year and €39.3m in the first three months of 2024.

But these profits will mean little to the bank’s thousands of customers and roughly 9,000 investors, who will be awaiting the outcome of the bank’s strategic review with bated breath.