Issue link: https://maltatoday.uberflip.com/i/217686
News maltatoday, WEDNESDAY, 27 NOVEMBER 2013 SMEs need new financing facilities, says Central Bank governor JAMES J. PISCOPO ACCESS to funding for small Josef Bonnici: "Bank lending and self-funding remain the main source of SME financing" and medium enterprises remains a challenge for the Maltese economy, Central Bank governor Josef Bonnici said yesterday. Addressing KPMG's conference on the financial services industry and the outlook for the industry for the next decade, Bonnici said that while Maltese banks remain profitable, liquid and well capitalised, the relatively higher lending costs for SMEs compared to the euro-area remained a matter of concern. "Bank-lending and self-funding remain the main source of SME financing... the BOV Jeremie facility was a success, but it high- lighted the need for financing beyond the traditional bank loan facilities," Bonnici said. He cited as an example the need for a development bank that could act as a new funding institution. "Malta has successfully diversified its economy, even with the help of the financial sector. We have seen a multiple increase in professional financial services. For instance, the aviation sector started from scratch 10 years ago, and has now registered a huge increase in business. And the financial services industry has the potential to further diversify the economy." The Central Bank governor described the local industry as a strong, prudent model, which however gives the impression it is not open to new opportunities. Both Bonnici and financial services regulator Prof. Joseph V. Bannister had praise for the financial services industry, and appealed to all players not to oppose change within the highly-evolved sector. "Resistance to change backfires. Worldwide, the financial sector is continuously evolving in regulation, governance and competitiveness. Recognition of what need to be done is necessary to keep Malta in the forefront of this sector," Bannister said. Bannister, who has been serving MFSA chairman for the past 13 years, remarked that Malta's financial services sector is not so high that would lead to an unbalanced economy. "We are at the same level as a number of other major countries. Malta is fortunate to possess financial services that stand out. But recent events have shown we cannot be complacent. Unfortunate events, bad PR and wrong impressions will actually take place some time or another. We need to have recovery programmes developed in time," Bannister said. The MFSA chairman highlighted that Malta is under the spotlight and appealed to those involved in the sector to be careful. Opening the KPMG conference, Finance Minister Edward Scicluna said that players within the financial services sector must look beyond their traditional business model and understand where the sector is heading within the next decade. "Financial services operators should look at re-inventing themselves in the face of change while also bearing certain focus areas which are likely to dominate the regulatory space in the near future, such as consumer and investor protection," he said. Scicluna underlined that the future of financial services in Malta will be strongly embedded in the twin pillars underpinning the European economic policy agenda in the coming years, namely financial stability and sustainable growth. "Work is being done to improve the stability and efficiency of the Single Market in financial services which is seen as essential to ensure the competitiveness of the real economy. Key principles include the need for the financial system to be properly supervised, more stable, more responsible, more consumer-friendly and growth-enhancing."