Issue link: https://maltatoday.uberflip.com/i/1176246
I know it's probably unwise to make comparisons between two entirely unrelated sectors like 'aviation' and 'banking'… but… what the hell, wisdom is overrated anyway. So here goes. Have you ever noticed a small discrepancy in the way Malta has traditionally approached its own homegrown varieties of both those industries? For instance: no one in his right mind would dispute that there is (and has always been) uni- versal, cross-party consensus on the importance of retaining Air Malta as a national airline; and at a glance, recent events seem to spell out exactly why, too. Be honest: would a low-cost airline like Ryanair or Easyjet ever operate emergency flights to 'rescue' stranded Maltese passengers, when major tour operators like Thomas Cook suddenly go bankrupt in mid- air? No, of course not. Those are profit-driven companies that operate on a cost-cutting plat- form. As a rule, they will never do anything that serves any other purpose than maximising their own profits: least of all, 'rescuing' people whose lives and safety are not even their own responsibility to begin with. Air Malta, however, oper- ates on a different basis. As a national airline, it comes complete with a 'national service ethos' extending far beyond its own commercial exigencies. So, it not only runs off-schedule flights for all such eventualities… but it also operates loss-making routes that no other airline would even contemplate; while oc- casionally playing its own part in situations such as the 2011 mass-evacuations of Libya, etc., etc. I don't know about you, but I call that 'service over and above the call of duty', myself. And that's not something you would ever realistically expect from any old private commer- cial airline (unless it's owned by Bruce Dickinson, of course. But let's not get side-tracked.) So when it comes to saving Air Malta from bankruptcy, both Nationalist and Labour administrations have always agreed that a certain amount of 'protectionism' is justified. In different ways, both had tried to circumvent EU restrictions on State Aid; and both insist that Air Malta is an 'asset of national strategic importance', to be safeguarded at all costs. Why, then, do we seem to have no interest whatsoever in protecting another asset of equal (if not even greater) 'national strategic impor- tance': our banks… or at least, the banks we used to own, before we sold them all off to a bunch of mercenary, profit- driven corporations that clearly couldn't give a toss about their own clients (still less Malta's 'national interest')? To my mind, the fact that we sold a valuable national asset like Mid Med Bank to HSBC should have been considered 'scandalous', regardless of the price of sale (which, at only 191 million euro, was already pretty scandalous in itself: given that HSBC generates an average of 40 million euro a year, and was therefore able to recoup its initial investment in around five years flat.) Coupled with the govern- ment's equally suspicious decision, in 1992, to sell off its remaining shares in Bank of Valletta, the 1999 sale of Mid Med effectively meant that Malta had willingly ceded all control of its own banking sector to foreign operators: entities which have no earthly reason under the sun to be concerned about the country's economic well-being (ex- cept, of course, in the purely parasitic sense, whereby a healthy Maltese economy also translates into greater profit margins for themselves.) It is for this reason, inciden- tally, that HSBC has so far resisted ever committing to a long-term presence in Malta. This week, its local CEO An- drew Beane was asked to make that commitment four times in a single press interview. To de- scribe his answers as 'evasive' would be the understatement of the decade: "I can only talk about the actions we are taking…"; "We never make long-dated strate- gic statements…" You don't exactly need to be a psychiatrist to interpret the subconscious message there. It translates roughly as: 'Are you nuts? Of course, we're not going to make any long- term commitment to remain in Malta. Why the bloody hell should we, anyway? We're a bank, not a State-run charity organisation…" And in all fairness to Mr Beane… he's right, you know. It was, in fact, a silly question to ask even once, let alone four times on the trot. Why should a major international banking giant like HSBC give any form of assurance or guarantee to the people of Malta… when it has absolutely no obligation to do so, of any kind whatsoever? The same question might, however, have made a little more sense had it been put to the chairman of Mid Med Bank before its sale…. or even BOV today…. or any bank owned by any Maltese shareholders… who, being Maltese, might actually give a toss about their own country's long-term eco- nomic prospects. But HSBC? Let's face it: the Hong Kong and Shanghai Banking Corporation has about as much reason to feel any 'commitment' or 'allegiance' towards Malta, as the Kurds had in 'helping out the Ameri- cans' in Normandy, 1944. (Note: unless your name is Donald Trump, you'll probably know that means 'absolutely zilch'). And besides: any decision to stay or leave is hardly going to be taken in the board-room of HSBC's local headquarters in Qormi. It will be taken in the company's global headquarters in London… which also means that it is not a decision that can even be influenced by the actions of any Maltese govern- ment. Make no mistake: we've been shafted. In transferring owner- ship of Mid Med to HSBC, Malta also kissed goodbye to its only hope of ever securing a 'long-term commitment' of permanence from a bank… of the kind, incidentally, that we only seem interested in secur- ing now (and not, for example, when we actually drew up the contract of sale in 1999.) So it's a little late in the day to be asking HSBC for 'guar- antees', isn't it? And yet, ever since the announcement that it will be closing down eight of its most prominent High Street branches, that is the question that seems to be on every- body's lips: 'Will it stay, or will it go'? Given the implications of the overall situation… I honestly think it's the wrong question to be asking. But let's have a crack at it anyway. If I were to place a bet on whether HSBC will stay or leave in the next five years… right now, I'd bet on 'Leave'. Maybe not today, or tomor- row, or even the day after… but the timeline of recent events reveals only one general direc- tion: and not just in Malta, either. Globally, HSBC is winding down all its 'consumer banking operations': all part of a shift towards the vastly more profit- able corporate and retail bank- ing sectors (of which, I need hardly add, Malta's markets are not exactly the biggest and most profitable in the world.) And this, by the way, was reported by Bloomberg over a year ago, in April 2018. The story claimed that "HSBC Holdings Plc chief executive officer John Flint and chairman Mark Tucker were reviewing as many as a quarter of the 67 countries in which the bank operates". The options were to exit or sell "smaller consumer operations such as Bermuda, Malta and Uruguay." This report was never denied by HSBC Malta: which limited its response to saying that "the bank would update investors at or before its first-half earn- ings." Erm… meaning what, exactly? Given that the same Bloomb- erg article reported a 19% de- cline in annual profits between 2016 and 2017 – and the 'first- half earnings' refer to 2018 – the only possible interpretation is that HSBC was waiting to see if this decline in profitability was just a random fluctuation, or the beginning of a sustained trend, before making its mind up one way or another. With hindsight, we now know that HSBC's profits for 2018 bounced back by 30%+. So whatever announcement the bank was planning for its investors could safely be put on hold. Admittedly, none of this 'proves' that HSBC was actively contemplating pulling out of Malta, as recently as last year. But – to my mind, at least – it strongly suggests that the even- tuality is something that HSBC 24 OPINION maltatoday | SUNDAY • 13 OCTOBER 2019 Raphael Vassallo So long, and thanks for all the profits... Regardless whether HSBC chooses to stay or leave… we are still faced with the uncomfortable prospect that it could make that announcement any time it likes, and for (almost) any reason it chooses