Last Updated on Tuesday, 19 July, 2022 at 11:54 am by Andre Camilleri
Marcel Cassar, CEO of APS Bank plc, was recently elected Chair of the Malta Bankers’ Association. Dayna Camilleri Clarke speaks to him about the changing landscape for banking and the role that banks plays in Malta’s economy.
You have recently been elected chair of the Malta Bankers’ Association for the coming term, what do you hope to achieve during your tenure?
They are very challenging times. An economy recovering from the pandemic, war on the doorstep of Europe with serious side-effects, interest rate normalisation and inflationary pressures, plus competition on banks coming from various directions, including tech disruptors and how regulators and supervisors are reacting to all this. Then our local spotlights, like how the banks can improve their approach to better serve the needs of our families, businesses, etc., strengthening Malta’s reputation, ensuring sustainable economic growth …. quite an agenda!
You will also represent the entity on a European level. What topics do you hope to bring to the fore with the European Banking Federation (EBF)?
Unsurprisingly perhaps, there’s a lot in common between our agenda and that of the EBF. Last week I was in Frankfurt for an annual dialogue meeting that brings together the EBF and the ECB, and many of the above challenges resonated right across big and small banks all over the continent. A general feeling is that Banking Union is still far from realised and European banks are at a competitive disadvantage with the US, and the ripple effects also reach our shores. Add to that the need for regulation to be proportionate and overall supporting economic development.
Many feel there is a huge skills gap in Malta when it comes to specific roles in finance and banking, is this true?
Yes, there is a skills gap. Not sure if it can be described as ‘huge’ but certain segments and specialisations in the financial services industry are lacking more than others. These include Risk Management, Compliance, Technology, Cyber Security, Digital Innovation, Financial Regulation and Sustainability. But I would say that general upskilling is required in other areas too, even the more ‘established’ roles.
If so, how can we address this?
It must be multipronged, timely and across various levels. Starting with academic education at University and MCAST and, as importantly, ensuring the availability of training programmes that specifically address the skills gap. The opportunities are endless, with online tuition, webinars and similar web-based resources. Equally important is the need to have persons with expertise and experience ‘imported’ to Malta, which is how skills and talent are transferred particularly given our limitations as a small financial centre. And that also requires the financial services industry to grow and develop more.
Malta recently shifted itself off the grey list, are we out of the woods? What lessons can be learnt from this? What is the next step?
There are emerging areas of high AML risk to watch out for. Geopolitical tensions, disruptions in trade and supply-chains and Covid-19 vulnerabilities where government funds and international financial assistance risk being exploited or misdirected, are all fertile ground for criminal activity. Add to that the increased use of crypto-currency, bypassing of sanctions regimes and cyber-attacks. Other phenomena at a more domestic level include real estate development and so-called reputation laundering, usually to be found in large-scale fund-raising, entertainment, and sports events. Above all, we need to protect our reputation jealously.
Beneficial Ownership (BO): How big of a problem is it in Malta and what are the reasons why people would hide their ownership of companies?
Lack of accurate company ownership information and deficiencies by those obliged to obtain such information were key contributors to Malta’s greylisting. Concealment of beneficial ownership is always a red flag for potential criminal activity, tax evasion and money laundering, especially when accompanied by complex corporate structures and use of jurisdictions known for weak regulatory enforcement. But there can be plausible reasons why people would want to cloak beneficial ownership, such as children and particular family situations. I would say that the problem in Malta was about international companies making use of our jurisdiction, rather than business firms owned by locals.
Money-laundering prosecutions have certainly increased, but have they increased enough?
Clearly, we are seeing more prosecutions but I do not have statistics against which this can be measured to say whether it is ‘enough’. However, money laundering prosecutions are only one cog in the wheel. There is a whole chain of suspicious activity reporting, follow-up and enforcement actions that need to work together, across the entire spectrum of subject persons, from which successful prosecutions can result. This also requires education, awareness and the possibility of new instruments such as investigations into unexplained wealth.
Are Malta and local banks doing enough to keep up with a consumer shift towards digital banking?
The banking landscape has changed and the move to digital is irreversible. While the shift is not unique to banking, FinTechs, like Revolut and Klarna, and the BigTech platforms, from Amazon to Tiktok, are entering the financial services value chain without actually becoming ‘banks’. This is redefining ‘banking’ and creates an awareness to look at tech firms as partners besides competitors. Maltese banks are at different stages of their digital transformation journey and keeping abreast of consumer trends is the new constant.
Marcel Cassar joined APS Bank as CEO in January 2016. His career started in 1987 with Price Waterhouse Malta, followed by MIBA/MFSC, now the MFSA (1991-1996). He was General Manager at Lombard Bank Malta p.l.c. (1996-2004) and First EVP and CFO at FIMBank p.l.c. (2004-2015). He currently occupies the position of Chair of the Malta Bankers’ Association (MBA) and has also previously served on the board of the MBA, including as Deputy Chair (2017-2018) and Chair (2018-2020), leading to a seat on the board of the European Banking Federation. Mr. Cassar is a CPA, a Fellow of the Malta Institute of Accountants, holds an MBA from the University of Wales and Manchester Business School (1995) and has lectured and supervised in the M.A. Financial Services course at the University of Malta.