Malta-based Sparkasse Bank has informed its clients that it will be stopping commercial payments and transactions in pound sterling to lessen its exposure in view of the uncertainty brought about by Brexit.
A bank spokesman confirmed the decision to stop commercial payments in GB pounds was due to Brexit and the result of “the bank’s loss of appetite in processing payments in this currency”.
Asked what led to the situation, the spokesman said: “It was mainly Brexit and a result of the bank’s wish to reduce its exposure to this currency until such time that matters around Brexit and providing financial services in or to the UK are clear.”
Several UK banks have recently adopted an approach of terminating relationships with non-resident customers, he said. The bank wrote to its customers, around 70 account holders, to inform them of its decision to stop commercial transactions.
“We wish to notify you that as from November 21, the bank will cease from transacting commercial payments in GBP (Great Britain Pounds),” the bank told customers as it asked them to make alternative arrangements for the GBP balances.
The news follows Bank of Valletta’s issue with its correspondent banks in US dollars.
Last year, Dutch bank ING cut ties with BOV, as part of a move to end relationships with smaller jurisdictions considered too risky to be worth serving. Earlier this year, BOV’s only remaining correspondent bank to offer US dollar transactions – Austria’s Raiffeisen Bank International – advised BOV that it was “seeking to terminate” clearing US dollars for the Maltese bank from March 31 next year.
A client affected by Sparkasse’s decision said this will make it even more difficult to do business from Malta.
“This latest news that another major bank will terminate its service of commercial GBP payments makes it more difficult to do business from Malta. It followed news that BOV had lost its USD correspondent bank.
“Both are major blows to the financial services sector. It also negatively affects the import and export business in a substantial way,” he said.
“The lack of action by Financial Intelligence and Analysis Unit and the Malta Financial Services Authority in the past years to tackle well-known cases has led to these problems.
“The responsibility of the negative sentiment of doing business from Malta and the problems faced by such banks and their clients lies with whoever failed to do his duty in the past years,” the client added.
The Sparkasse spokesman said the bank will continue to offer GBP transactions but these will be restricted to SICAVs and private banking customers holding investment portfolios with the bank and who may still wish exposure to the pound.
“For these particular customers, the bank would offer the necessary GBP clearing as it would settle or redeem investments in this currency and receive dividends and coupon payments for its customers,” the spokesman said.
Just last July, Sparkasse was slapped with a €217,635 fine by Malta’s FIAU after an inspection found “serious shortcomings” in the bank’s money-launderingbrexi safeguards.
The bank hit the headlines in 2018 for its role in approving suspicious transactions by local investment firm Portmann Capital as part of an alleged Malta-Venezuela money-laundering scheme using funds embezzled from PDVSA, Venezuela’s state-owned oil company.
Portmann had its operations suspended by the Malta Financial Services Authority for its role in the €500 million scheme, which has yet to yield any local prosecutions.