Credit ratings agency Standard and Poors has highlighted increased reputational and operational risks for Malta’s banking sector, moving its risk score up two notches on its 10-point scale.
In a news release published on Wednesday, S&P Global Ratings noted allegations of money laundering against Pilatus Bank and its “perception of poor transparency at some banks” on the island.
Malta, which previously scored a four on the S&P Global Ratings banking industry risk score, has now been given a six-out-of-ten rating. A score of one on the index is the lowest risk, with 10 being the highest.
Malta’s enhanced risk, as perceived by S&P Global, means the credit rating agency’s anchor for banks operating primarily in Malta now sits at BBB-, rather than BBB.
The warning and downgrade comes just one month after the European Banking Authority found that Malta’s FIAU failed to impose effective sanctions against Pilatus Bank and breached EU money laundering directives in failing to act.
S&P Global Ratings expressed its view that EBA scrutiny was prompted by the arrest in the US of Pilatus Bank chairman Ali Sadr Hasheminejad on charges of having violated economic sanctions against Iran.
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