Depositor Compensation Scheme
                           Investor Compensation Scheme

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Minister of Finance, the Economy and Investments announces a higher level of guarantee on deposits held with banks in Malta

On Wednesday 8 October 2008, Hon Tonio Fenech, Minister of Finance, the Economy and Investments announced that the level of protection afforded to depositors of banks in Malta has been increased from €20,000 to €100,000 with immediate effect.

Hon Fenech emphasized that it is vital that confidence be maintained in our banking system and in the institutions that monitor and regulate them. “I am convinced that we have no cause for alarm not only because our banks have a sound business model, but also because we have a high level of commitment to protect the interests of depositors”, he said.

Hon Fenech added: “The Central Bank of Malta and the Malta Financial Services Authority have been in constant touch with the market since the first signs of the turmoil emerged, monitoring banks for any possible signs of weakness that could justify the need for pre-emptive action to be taken. To-date no signs of stress have been detected in these banks. In fact the situation today remains the same as it was when the IMF confirmed in their latest assessment last June that the banks are well capitalised, have high liquidity ratios and diversified portfolios.

I should stress that the banks in Malta to which depositors have entrusted their savings are not experiencing the same difficulties that banks elsewhere are currently facing. In particular, Maltese banks do not have refinancing problems resulting from what can only be described as a freezing of the international money markets. Unlike banks in some countries which have liquidity problems, banks in Malta do not borrow from the international markets to fund their normal lending operations. The main source of funding for Maltese banks are deposits made by their customers.
 

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Click here for the official media release (in Maltese) issued by the Department of Information.

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The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a licensed investment firm is unable or likely to be unable to pay claims against it. In general this is when the licensed firm stops trading or becomes insolvent. The Scheme is based on the EU Directive 97/9 on investor-compensation schemes.

The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment. The Scheme is based on the EU Directive 94/19 on deposit-guarantee schemes.

Each scheme is a separate and distinct entity from the other. However, both schemes are managed by a single Management Committee which is appointed by the MFSA. This Committee is made up of persons representing the MFSA, the Central Bank of Malta, investment firms, the banks and customers.

Each Scheme is intended to promote confidence not only in licensed institutions, but more importantly, in the financial system as a whole. The two schemes are in fact financed by the banks and investment firms respectively. This means that the consumer will not be asked to contribute to these schemes.

These two schemes have been introduced as an additional layer of security within a regulatory and legal framework that is already sound and are not being implemented for any particular situation that has arisen in practice.

This website provides information on both the Depositor Compensation Scheme and the Investor Compensation Scheme. If you have a query and you have not found its answer on this site, please use our Feedback Form.
 

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