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26.03.2020 2 NEWS Central Bank new directive on cheque deposits and cash withdrawals FROM PAGE 1 A MaltaToday editorial on Wednesday argued that bank- ing profits could be used to shore up a government coro- navirus stimulus package that will cost close to €70 million each month to subsidise wag- es for business owners who are unable to trade, but still face the weight of interest rates and rents. "Banks are amongst the most stringently, multi-regulated and supervised entities at a local, European and interna- tional level. Their very exist- ence and continuity to oper- ate depends on their ability to make and retain certain levels of profits," the MBA said. "They are evaluated on the profitability of their business model, their level of capital adequacy and the observance of minimum ratios, amongst various other things. Bank profits and their financial strength are what enables them to keep lending and sup- porting economic activity." Malta had already intro- duced a windfall tax on bank- ing profits in 1998, when Labour minister Leo Brin- cat levied a one-off 15% on profits. The move replicated a similar windfall tax by UK Labour prime minister Tony Blair in 1997. Prime minister Robert Ab- ela on Tuesday evening said he would not think of taxing banking profits in the current climate. But the MBA insisted that its banks had paid "hundreds of millions of euros in direct taxes not to mention many tens of millions more in indi- rect taxes", and that its profits benefited thousands of share- holders. "As employers and providers for the livelihood of thousands of bank employees and their families, the banks' contribution to the country's social and welfare system is significant." The MBA said its banks will continue to provide their es- sential service with "the nec- essary lifelines, reliefs and support to their customers in this time of need despite knowing that the banks will also carry their share of the burden for this." The MBA said banks will see "a challenging year for bank profitability" with the coro- navirus pandemic in 2020. "Talk of imposing special or windfall taxes on the banks as some kind of consequence for their strong past performance would be a dangerous step at a time when the banking sys- tem needs all the stability it can have." CEOs and senior executives of the core domestic banks have met government offi- cials this week. "Separately the banks have been commu- nicating their own schemes, engaging with and reaching out to their customers in the process. Discussions are also at an advanced stage with the Malta Development Bank with regard to the guarantee schemes announced by Gov- ernment as part of its eco- nomic relief measures," the MBA said. Banks predicting 'a challenging year for profitability' FOLLOWING the advice of national health authorities for persons to re- main indoors as much as possible, the Central Bank of Malta yesterday issued a Directive on important measures concerning cheques. Bank customers persons will now be able to avoid visiting bank branches and other financial service providers, by depositing cheques through trusted third parties. e measures were introduced after consultation with the commercial banks as a temporary measure during the cur- rent pandemic restrictions and will come into force today. Directive 17 is aimed at maintaining banking services essential to the life of the community. ey spell out minimum services expectations to be provided by commercial banks and financial institu- tions. e most important change affects the use of cheques which will no longer re- quire direct deposit by the beneficiary. As from today, those cheques marked as "only" for use by the beneficiary can - until further notice - be deposited by a trusted third party of the beneficiary. is can be done in two ways: • e beneficiary can instruct the trust- ed person to make the deposit directly into the beneficiary's account. • e beneficiary can also instruct the trusted person to make the deposit into the trusted person's own bank account via an ATM.. is should be particular- ly helpful for those beneficiaries who do not have a bank account. ese measures provide a remedy for a section of the population who will be receiving their social security benefits, in- cluding pensions, in the form of a cheque from the Government. e new Directive also takes into ac- count the concerns of commercial banks with regards to the wellbeing of their own staff, and places emphasis on the use of ATMs to reduce the number of people who need to rely on over-the- counter services. Since banks may also be working with limited resources, the amount of time taken to clear cheques and drafts has been extended temporar- ily to a maximum of six days, while cash deposits may take up to three days to be processed. To reduce the number of customers in- side branches, all banks are now author- ised to restrict over-the-counter cash withdrawals from a deposit account as- sociated with a payment card unless the amount exceeds €500. In the meantime, banks and financial institutions must provide over-the-coun- ter cash deposit services for all those customers who do not have any other access to alternatives such as ATMs. Bank profits and their financial strength are what enables them to keep lending and supporting economic activity HSBC Malta registered just over €45 million in pre-tax profits

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