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Maltese Laws |
BANKING ACT
To regulate the business of banking.
15th November, 1994
ACT XV of 1994 as amended by Acts XXIV and XXV of 1995, VI of
2001, XVII of 2002, IV and IX of 2003, XIII of 2004 and XX of 2007; Legal
Notice 425 of 2007; and Acts III and XVII of 2009, II of 2010, and II and X
of 2011.
"Advanced Measurement Appro ach" means an approa ch as defined in a Banking Rule on capital requirements;
"bank" or "credit institution" means an undertaking, the business of which is to receive deposits or other repayable
funds from the public and to grant credits for its own account;;
"Banking Rule" means a Rule issued by the competent authority under various articles of this Act;
"bo dy corporate" means a body of perso n s havin g a legal personality distinct from that of its members;
"branch" means premises of a credit institution, other than its head office, from which the business of banking is undertaken;
"business of banking" means the business of a person who as set out in subar ticle (2) accepts deposits of money from the
public withdrawable or repayable on demand or after a fixed period or after not ice or who bo rro ws or raises m oney from the
p ubli c (in c ludi ng the borrowing or raising o f m o ney b y the issue of de bentures or debenture stock or other instruments
creating or ack now ledgi ng i ndebt edness), in eith er case for the p urp ose of employing such money in whole or in part by lending
to others or otherwise investing for the account and at the risk of the person accepting such money;
"Capital Adequacy Directive" means D irective 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions,
as may be am end ed from ti me to t im e, a nd in clu des any i m pl eme nti ng measures that have been issued or may be issued
thereunder;
"Capital R e quire ment s Directive" means Council Directive
2006/48/EC of 14 June 2006, relating to the taking up and pursuit
of the business of credit institutions (recast), as may be amended or upd ated from time to time, and includes any implemen ting
measures that have been issued or may be issued thereunder;
"Central Bank" means the Central Bank of Malta as defined by the Central Bank of Malta Act;
"close links" means a situation in which two or more persons are
Short title.
Interpretation. Amended by: XXIV. 1995.362; XXV. 1995.434; XVII. 2002.157; IX. 2003.76; XIII. 2004.82; XX. 2007.85; XVII. 2009.11; II. 2011.2;
X. 2011.37.
Cap. 204.
Cap. 386.
Cap. 168. Cap. 386.
Cap. 330.
linked in any of the following ways:
(a) by participation, in the form of direct ownership or by way of control, of twenty per centum or more of the voting rights or
capital of a body corporate; or
(b) by control, through the relationship between a parent undertaking and a subsidiary undertaking as defined in article 2(2) of
the Companies Act, or a similar relationship between any natural or legal person and an undertaking; or
(c) permanently to one and the same third person by a control relationship;
"company" means a lim ited liability company constituted in Malta in accordance with the Commercial Partnerships Ordinance* or the Companies Act, or any law which may from time to time be
in force, or a company registered, licensed or holding an equivalent authorisation in another country outside Malta under the laws
of an y cou n try pro v id ed th at such company, if not co nstit uted in Malta, would qualify to be so registered or licensed under
the laws of Malta;
"competent aut hori t y" m e a n s t h e M a l t a F i n a n c i a l S e r v i c e s
Authority established by the Malta Financial Services Authority Act;
"connected persons" means persons defined as such in a Large
Exposures Rule;
"consolidating supervisor" means the competent authority or the overseas regulatory authority, as the case may be, responsible
for the exercise of supervision on a consolidated basis of EU parent credit institutions and credit institutions controlled by EU
parent financial holding companies;
"controller" is a person who, alone or t ogether with others, exercises control in relation to a body corporate;
"court" means the Civil Court, First Hall;
"credit facility" means the lending of a sum of money by way of an advance, overdraft or loan or any other line of credit
including discounting of bills of exchange and promissory notes, guarantees, indemnities, acceptances and bills of exchange endorsed
pour aval;
"deposit" means a sum of money paid-in on terms under which it will be repaid, with or without interest or a premium and
either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving
it;
"d irect or" in clu d es an in di vi du al occ u p y i ng th e po siti on o f direc t or of a compa n y, by wha t ever
name he ma y be ca lled, empowered to carry out substantially the same functions in relation to the direction of the company as those
carried out by a director and in respect of a company registered, licensed or holding an equivalent authorisation outside Malta
includes a member of a local board or agent or representative of that company;
*Repealed by Act XXV of 1995 (Chapter 386).
"EEA State" means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on
the
2nd May, 1992 as amended by the Protocol signed at Brussels on
the 17th March, 1993 and as amended by any subsequent acts;
"EU parent credit institution" means a parent credit institution in a Memb er S t at e which is no t a sub s idi a ry of
ano t her credi t insti t ut ion aut horised in any Memb er St ate, or of a fin a ncial holding company set up in any Member State:
For the purpose of this definition, "parent credit institution in a Member State" means a credit institution which has a
credit institution or a financial institution as a subsidiary or which holds a p a rt ici p at io n in such an i n st it ut io n
, an d wh i c h is no t it self a su b s id iar y of an ot her cred it in sti t u t i o n aut h o r i s ed in th e same Member State,
or of a financial holding company set up in the same Member State;
"EU parent financial holding company" means a parent financial holding company in a Member State which is not a subsidiary
of a credit institution authorised in any Member State or of another financial holding company set up in any Member State:
For the purpose of this definition, "parent financial holding company in a Member State" means a financial holding company
which is not itself a subsidiary of a credit institution authorised in the same Member State, or of a financial holding company set
up in the same Member State;
"Financial Serv ices Tr ibu n al" or "the Tr ib unal " means the Financial Services Tribunal established under
the Malta Financial Services Authority Act;
"holding company" has the same meaning as is assigned to the term "parent company" in the Companies Act;
"home Member State" means the Member State in which a credit institution has been authorised in accordance with article
6 to 9 and
11 to 14 of the Capital Requirements Directive;
"host Member State" means the Member State in which a credit institution has a branch or in which it provides services;
"initial capital" means paid up capital and reserves as defined in a Banking Rule on own funds;
"Large Exposures Rule" means a Rule as shall be issued by the competent authority to regulate large exposures;
"licence", in relation to the business of banking, means a licence granted under this Act;
"Malta’s in ternati onal com m itm ent s " m eans c o mm it men t s, responsibilities and obligations arising out of
European Community law, or membership of, or affiliation to, or relationship with, any int e rnati o n a l, gl oba l o r re gio
n al o rg a nisat i o n s o r grou pi ng of countries or out of any treaty, convention or other international or re cip r ocity agre
emen t, howe v er called, whether bilateral or multilateral, to which Malta or the competent authority is a party;
"ma n ager" mea n s a pers on who is plac ed in char ge of the
Cap. 330. Cap. 386.
Cap. 373.
business or part of the business of a company or otherwise who has a substantial supervisory role with the power to make policy and
executive decisions on behalf of the company;
"material activities" means:
(i) activities of such importance that any weakness or failure in the provision of these activities could have a significant
effect on the licensed entity’s ability to meet its regulatory responsibilities and, or to continue in business;
(ii) any other activities requiring a licence from the supervisory authority;
(iii) any activities having a significant impact on the entity’s risk management; and
(iv) the management of risks related to these activities;
" M e m be r S t ate" me ans a Me mb er S t a t e of the Europe an
Communities;
"Minister" means the Minister responsible for finance;
"money laundering" has the same meaning ascribed to it by the
Prevention of Money Laundering Act;
"officer", in relation to a company, includes a director, partner, manager or company secretary or any person effectively
acting in such capacity whether formally appointed or not;
"outsourcing" means a licensed entity’s use of a third party (the ou tsou rci n g se rv ice pr ov id er) t o perform act
ivit i e s t h at woul d normally be undertaken by the licensed entity, now or in the future. The supplier may or may not be a licensed
entity;
"outsourcing service provider" means the supplier of goods, services or facilities, which may or may not be an licensed
entity, and which may be an affiliated entity within a corporate group or an entity that is external to the group;
"overseas regulatory authority" means an authority which in a cou n tr y or t e r r it or y ou tsi d e Malta exerc i ses
any func tion corresponding to the functions of the competent authority under this Act;
"qualifying shareholding" means a direct or indirect holding in a company which represents ten per centum or m ore of the
share capital or of the voting rights, taking into account the voting rights as set out in Articles 9 and 10 of D i rective 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harm onisation of transparency requirements in relation
to information about issuers whose securities are admitted to trading and amending Dire ctiv e 2001/34/EC, as well as the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it
possible to exercise a significant i n fluen ce ov er the man a gem e nt of the company in which that holding subsists, and "qualifying
shareholder" shall be construed accordingly:
Provided that, in determining whether the criteria for a
qualifying shareholding are fulfilled, the competent authority shall no t take in to accoun t voting ri ghts or shares which inve
stment firms or credit institutions may hold as a result of providing the underwriting of financial instruments and, or placing
of financial in struments on a fi rm commitment basis in te rm s of point 6 of Section A to Annex1 to Directive 2004/39/EC, provided that those ri ghts are, on th e on e hand, no t exercised or otherwise used to i n t e rv ene in th e management of the
issuer and, on the other, disposed of within one year of acquisition;
"reconstruction" has the same meaning as in the Companies Act; "representative office" means, in relation to a body corporate,
unincorporated body or association formed in accordance with or
existing under the laws of a foreign country, prem ises in Malta from which the business of banking is promoted or assisted in any
way, and in relation to a body corporate, unincorporated body or association formed in accordance with and existing under the laws
o f Mal t a, premises outside Mal t a from w h ich the busi n ess of
banking is promoted or assisted in any way;
"subsidiary" has the same meaning as is assigned to the term
"subsidiary undertaking" by the Companies Act;
"third country" means a country that is not a Member State or an
EEA state;
"working days" shall not include Saturdays and the days referred to in the National Holidays and Other Public Holidays Act.
(2) A person shall be deemed to be accepting deposits of money if, whether as principal or as agent, he accepts from
the public deposits of money as a regular feature of his business, or if, whether as principal or as agent, he advertises or solicits
for such deposits, without regard to the terms and conditions under which such d e p o sit s are solicit ed or received and without
regard to whether certificates or other instruments are issued in respect of any such deposits:
Provided that the acceptance of money against any issue of de bentures or debenture stock or other instruments creating or acknowledging
indebtedness offered to the public in accordance with any law in force in Malta shall not of it self be deemed to constitute acceptance
of deposits of money for the purposes of this Act and any regulations or Banking Rules made thereunder.
(3) The business activities of a credit institution may, besides the business of banking, include any or all of the additional
activ iti es l i sted in the Schedu le as may be d e t e r mined by the competent authority.
(4) The objective of this Act is, in part, to implement the provisions of the Directive and the Capital Adequacy Directive,
and shall be interpreted and applied accordingly.
(5) In this Act and in any regulations made thereunder, if there i s any co nfl i ct between the En gl ish and the M a ltes e
texts, the English text shall prevail.
Cap. 386.
Cap. 386.
Cap. 252.
Powers and duties of the Minister. Amended by:
XVII. 2002.158; XX. 2007.86;
II. 2011.3;
X. 2011.38.
3.(1) (a) The Minister, acting on the advice of the competent authority, may make regulations as may be required to give effect to the provisions
of this Act, and may by such regulations transpose, implement and give effect to t h e requ ir em en ts of t h e Capi tal Requ
ir em en ts Directive and the Capital Adequacy Directive.
(b) The Minister, acting on the advice of the competent authority, may in addition amend or revoke such regulations.
(2) (a) The Minister may, after consultation with the competent authority and the Central Bank, if he deems it expedient in
the public interest so to do, by order published in the Gazette declare any day or days to be a bank holiday or holidays.
(b) On any day declared to be a bank holiday under this article, whether such day is also a public holiday or not, no bank shall
do any business with the public except to the extent allowed by the order.
Powers and duties of the competent authority. Amended by:
XVII. 2002.159; XX. 2007.85, 87;
II. 2011.4.
the competent authority shall at all times afford such co-operation t o th e Centr a l Ban k as th e Centr a l Ban k m a y
r e quir e in the
discharge of its duties.
(2) The competent authority may make, amend or revoke Banking Rules as may be required for carrying into effect any of the
provisions of this Act and any regulations or Banking Rules made thereunder.
(3) Banking Rules shall be binding on licence holders and others as may be specified therein.
(4) Banking Rules and any amendment or revocation thereof sh all be off i cia lly co mm u n ic ated to cr edi t in st it ut ion
s an d the competent authority shall m ake copies th ereof available to the public.
(5) Banking Rules imposing an obligation or requirement on the public shall be made by regulations in accordance with article
3(2).
Supervisory practices. Added by:
II. 2011.5.
(2) For the purpose of subarticle (1):
(a) the competent authority shall participate in the activities of the Committee of European Banking Supervisors;
(b) the competent authority shall follow the guidelines, recommendations, standards and other measures agreed by the
Committee of European Banking Supervisors and shall state the reasons if they do not do so; and
(c) national mandates conferred on the competent authority shall not inhibit the performance of its duties under this
Act or as a member of the Committee of European Banking Supervisors.
(2) No credit institution licensed or holding an equivalent authorisation outside Malta may open a branch, agency or office
or set up any subsidiary in Malta unless it is in possession of a licence granted under this Act by the competent authority:
Provided that a credit institution licensed or holding an equivalent authorisation in a Member State or EEA state shall be
entitled to exercise its rights under European Community Law.
(3) In the event of reasonable doubt as to whether the business of banking or of accepting deposits is or is not being transacted
in or from Mal t a by any person, t h e m a t t er shall b e con c lusi vely determined by the competent authority.
(4) The granting of a licence shall be subject to an annual fee as the competent authority may determine from time to time.
(5) The Minister may, after consulting the competent authority, establish or recognise other forms of authorisation and notification
procedures, subject to such conditions, additions, adaptations, and modifications and exemptions as may be prescribed; and different
provisions may be made for different cases or classes of cases, under such terms and conditions as may be prescribed, and account
shall be taken of Malta’s international commitments.
Licences for banking activities. Amended by:
XVII. 2002.160; XX. 2007.85, 88;
L.N. 425 of 2007; III. 2009.17;
XVII. 2009.12; II. 2011.6.
(2) All applications for a licence shall be in such form and accompanied by such information, and shall conform with such
requirements as may be prescribed from time to time by a Banking Rule and an application may only be withdrawn by written notice
to the competent authority at a time before i t h as been granted or refused.
(3) The competent authority shall have the power to require any person to provide such information as it shall deem necessary for
the purposes of determining an application for a licence or for the purposes of determining whether to restrict or revoke a licence.
Application for a licence.
Amended by: XVII. 2002.161; XX. 2007.85;
II. 2011.7.
Issuing of a licence. Amended by: XVII. 2002.162; IV. 2003.178;
XX. 2007.85, 89; L.N. 425 of 2007;
XVII. 2009.13; II. 2011.8.
(a) its initial capital amounts to not less than five million euro (€5,000,000.00):
Provided that, without prejudice and subject to the provisions of article 16A, the competent authority may by a provision contained
in a Banking Rule, increase the amounts laid down in this paragraph, and such amounts may be designated in such other currency
as may be specified in a Banking Rule;
(b) there are at least two individuals who will effectively direct the business of the credit institution in Malta and such persons
are of sufficiently good repute and have sufficient experience to perform such duties;
(c) all qualifying shareholders, controllers and all persons who will effectively direct the business of the credit institution are
suitable persons to ensure its prudent management;
(d) the competent authority is satisfied that, where there are close links between that company and another person or persons,
such links do not through any law, regulation, administrative provision or in any other manner prevent it from
exercising effective supervision of that company under the provisions of this Act and any regulations or Banking Rules made
thereunder:
Provided that in respect of subarticle (1)(a), (b) and (c), if th e appl icant is a credit inst itution l i censed or h o lding an equivalent authorisation in another country, it has its
head office in the same country where it is registered and, or licensed:
Provided further that in respect of subarticle (1)(d), the company shall, after being li censed under this Act, inform the co mp et ent auth ori t y fo rth w it h o f any change in
circumstances concerning the application of the said subarticle (1)(d) and shall further provide the competent authority with information necessary to monitor compliance with the conditions referred
to in the said subarticle (1)(d) on a continuous basis.
(2) The competent authority shall determine each application for a licence within six months of receipt of the application or,
if the applic atio n does not comply with article 6( 2) or additional information is required, within six months of compliance with
the said subarticle or the furnishing of the information as the case may be, whichever be the later. In any event an application
shall be determined within twelve months of its receipt.
(3) The competent authority shall determine an application by doing any of the following:
(a) granting a licence without conditions;
(b) granting a licence subject to such conditions as it may deem appropriate;
(c) refusing to grant a licence:
and if it r efu ses an application it shall inf orm the appl ican t, in writing, of the reasons for the refusal.
(4) In granting a licence the competent authority may subject it to such conditions as it may deem appropriate, and having granted
a licence it may, from time to time, vary or revoke any condition so imposed or impose new conditions.
(5) Where the competent authority for any reason fails to determine an application for a licence within the time prescribed
und er su barti c le (2 ), such fact sha l l be de eme d to constitute a refusal to grant a licence.
(6) A credit institution licensed under this Act shall provide the com p eten t au thority wi th particulars of any changes in
the i n formatio n pro v ided u nder thi s Act as so on as such cr edi t institution becomes aware of such change.
(7) When there is a merger of two or more credit institutions following the consent of the competent authority, the own funds of
the credit institution resulting from the merger shall not be less than the total own funds of the merged credit institutions at
the time of the merger.
(8) The competent authority shall notify the Commission of the European Union of every licence issued to a credit institution in
terms of the Act and any regu lat i ons or Ban k ing Rul e s m a de thereunder.
7A. (Deleted by Act II. 2011.9.)
(a) specify the name it is proposed to use in relation to the activities of the representative office and the address of such office;
(b) be accompanied by a certified copy of the authorisation of the company to conduct the business of banking
in a country other than Malta.
(2) A company mentioned in subarticle (1) having a representative office in Malta shall likewise notify the competent
authority -
(a) at least two months in advance of any proposed change in name of the representative office;
(b) of any change in its licence to conduct the business of banking in a country other than Malta, no more than
Right of redemption. Added by:
XVII. 2002.163. Amended by:
IX. 2003.77; XX. 2007.90;
L.N. 425 of 2007.
Representative offices of non- Maltese banks. Amended by: XVII. 2002.164; XX. 2007.85, 91.
two months after such change.
(3) The competent authority may, at any time, serve on a representative office in Malta a notice objecting to the name
or the proposed name of such office.
(4) The competent authority shall not give a notice pursuant to subarticle (3) unless it considers that the name or proposed name
is misleading to the public or otherwise undesirable, and upon receipt of such notice, the representative office shall not use the
name to which the competent authority has objected in relation to activities conducted in Malta.
(5) The competent authority may, by notice in writing, require any company having a representative office in Malta or which has
given notice pursuant to subarticle (1) to provide the competent authority with such information or documents as the competent auth
ority may reason ably require, and the said company shall comply with such notice in the period as is reasonably specified by the
notice.
(6) A representative office in Malta shall supply the competent au th ori t y wi th a cop y of an y docu m ent wh ich it is r e
q u i r ed to provide to the Registrar of Companies no later than the time by which such document must be provided to the said Registrar.
(7) The competent authority may by a Banking Rule provide that the provisions of articles 20 to 24 shall apply to representative
of fices in Malta in the sam e m a n n er as they apply to credit institutions subject to such variations and conditions as may be
established in the Banking Rule.
(8) The competent authority may by Banking Rule impose on companies which have established or which propose to establish representative
offices in Malta such requirements as the competent authority considers appropriate in connection with those offices and the activities
conducted from them and may impose on such companies such annual fee as may be determined from time to time.
(9) The competent authority may, within the two months referred to in subarticle (1), order a company referred to in the
said subarticle (1) not to establish a representative office in Malta and at any time thereafter order the closure of any representative
office so established.
Restriction and revocation of a licence. Amended by: XVII. 2002.165; XX. 2007.92; XVII. 2009.14; II. 2011.10.
(a) renounces the licence; or
(b) does not commence business pursuant to the licence within twelve months of its issue or within such other period of time as may
be specified in the licence; or
(c) is declared bankrupt or goes into liquidation or makes a composition with its creditors or is otherwise dissolved;
or
(d) has ceased to operate as a result of a merger with another credit institution; or
(e) is a branch of a credit institution licensed or holding an equivalent authorisation in another country outside Malta and
the competent authorities in the country of incorporation withdraw the authorisation to the credit institution.
(2) The competent authority may impose restrictions on a
licence or may revoke a lice nc e in any of the following circumstances:
(a) if any document or information accompanying an application for a licence or any information given in connection therewith
is false in any material particular or if the holder of a licence conceals from, or fails to notify to the competent authority
any document or information or change therein which it was its duty to reveal or notify under this Act or any regulations or
Banking Rules made thereunder; or
(b) if the holder ceases to carry on the business of banking in Malta for more than six months; or
(c) if the holder fails to comply with any of the provisions of this Act or any regulations or Banking Rules made thereunder or
with the conditions under which the licence is granted; or
(d) if the holder no longer possesses sufficient own funds in terms of article 16A; or
(e) if the holder is likely to become unable to meet its obligations or can no longer be relied upon to fulfil its obligations towards
depositors and creditors; or
(f) if the holder has insufficient assets to cover its liabilities; or
(g) if the holder has suspended payment or is about to suspend payment; or
(h) if the competent authority considers that, by reason of the manner in which the credit institution is conducting
or proposes to conduct its affairs, or for any other reason, the interests of the depositors of the credit institution are threatened.
(3) Restrictions imposed by the competent authority pursuant t o subart icle (2) shall be such restrictions as the competen t authority
shall consider appropriate for the proper compliance by the cred it in st it uti on wi th the pr ovi sion s of t h is Act and any
regulations or Banking Rules made thereunder and the conditions, if any, of its licence and for the protection of depositors and
may include (without prejudice to the generality hereof) -
(a) the removal of any officer of the credit institution or the replacement of any officer by such person as the competent authority
may designate;
(b) the requirement for any person who directly or indirectly possesses a qualifying shareholding in the credit institution
to divest himself of all or part of that
holding;
(c) the requirement for the credit institution to take or refrain from any action;
(d) the requirement that the credit institution be prohibited from undertaking any transaction or transactions or any class
of business or be permitted to undertake any transaction or transactions or any class of business only upon such terms as
the competent authority may prescribe.
(4) The competent authority shall have the power to vary or remove any restrictions imposed under this article.
(5) Where the competent authority intends to restrict or revoke a licence or to vary any restriction, it shall serve written notice
of its intention on the credit institution; such notice shall specify the grounds upon which the competent authority intends to take
action and shall specify a period in which the credit institution shall be entitled to make representations to the competent authority
as to why such action sho u ld not be taken . Unless the competent authority decides that the matter is urgent, it shall not impose
or vary any restriction or revoke a licence before the expiry of such period.
(6) A licence granted for the establishment in Malta of a branch o f a cre d i t in sti t u t i on l i cen sed or ho ld in
g an equ i v a le nt authorisation in another country outside Malta may only be revoked after consultation with the competent authorities
of the country of i n co rporat io n, unl ess the competent authority de cid e s t h at t h e matter is urgent or that there are
circumstances which make such prior consultation inappropriate.
(7) Upon the restriction or revocation of a licence of a credit institution licensed in Malta, the competent authority shall inform
the competent authorities of the country of any foreign states in which the credit institution or its subsidiaries are carrying on
the business of bank ing. The comp etent autho r ity shall no tify th e Commission of the European Union of any revocation of a licence.
(8) Where the competent authority is satisfied that the circumstances so warrant, it may at any time make public
any action it has taken under this article.
Appeals. Amended by: VI. 2001.24. Substituted by:
XVII. 2002.166. Amended by:
XVII. 2009.15.
(a) to refuse an application for a licence;
(b) to impose any condition on the grant of a licence; (c) to impose or vary any restriction;
(d) to revoke a licence;
(e) to issue a notice under article 8(3); (f) to close a representative office;
(g) to impose an administrative penalty under the provisions of article 35A;
(h) to issue any notice or make any order under articles
13, 13A and 13C;
(i) to make any order under article 14; or
(j) by failure of the competent authority to determine an application for a licence under article 7(5),
may appeal against the decision to the Financial Services Tribunal within such period and under such conditions as established under
the Malta Financial Services Authority Act.
Cap. 330.
(2) Unless with the written consent of the competent authority, no credit insti tuti on licensed i n Mal ta m ay op en a n ew branch,
agency or office or set up or acquire any subsidiary in any place outside Malta.
(3) A credit institution licensed in Malta shall be prohibited from opening a branch, subsidiary or representative office in a
third country where the secrecy laws or other regulations of that country prohi bit the i n form ation flows deemed n ecessary for
adeq uate consolidated supervision.
(4) A credit institution licensed in Malta shall be entitled to exercise its rights under the European Passport Rights for Credit Institutions Regulations.
Opening of branches. Amended by: XVII. 2002.167; XX. 2007.93; XVII. 2009.16; II. 2011 11.
S.L. 371.11
(2) The competent authority shall notify the European Commissio n an d the European Banking Committee of al l authorisations for branches granted to credit institutions having their head office outside the European Community.
Opening of branches having their head office outside the European Union. Added by:
II. 2011.12.
(2) A credit institution licensed or holding an equivalent authorisation in another country outside Malta may use the name us ed in the country where it is licensed or holds an equi valent authorisation, save that, where there is a risk that the use of such a nam e may be m isleading, such credit instituti on shal l add such explanatory particulars to its name as the competent authority shall direct.
Use of the word "bank". Amended by: XVII. 2002.168; XX. 2007.94;
II. 2011.13.
(3) Every credit institution shall use as part of its description or title the word "bank" or one or more of its derivatives.
Participation in a credit institution. Amended by: XVII. 2002.169; XIII. 2004.83; XX. 2007.85, 95; III. 2009.18. Substituted by: XVII. 2009.17.
(a) acquire, directly or indirectly, a qualifying share- holding in a credit institution;
(b) increase, directly or indirectly, an existing shareholding which is not a qualifying shareholding so as to
cause it to become a qualifying shareholding in a credit institution; or
(c) further increase, directly or indirectly, such qualifying shareholding in a credit institution as a result of which the proportion
of the voting rights or of the capital held would reach or exceed twenty per centum, thirty per centum or fifty per centum or
so that the credit institution would become its subsidiary,
(hereinafter referred to in this Act as the "proposed acquisition"), shall notify the comp etent au tho r i t y in writ
in g of an y such decision , indi cating the size of the intended shareh oldin g and providing any relevant information as and in
the manner that the competent authority may by a Banking Rule require, including the form in whi c h such noti f icati on shal l
be made an d th e cri t eria adopted by the competent authority in determining whether such person is a suitable person.
(2) Notwithstanding anything contained in any other law, any person who -
(a) acquires, directly or indirectly, at least five per centum but less than ten per centum of the share capital or of the voting
rights in a credit institution; or
(b) increases, directly or indirectly, an existing shareholding so that the proportion of the voting rights or
of the capital held would amount to at least five per centum but less than ten per centum,
shall inform the competent authority in writing, indicating the size of the shareholding and providing any relevant information as
and in the manner that the competent authority may by a Banking Rule requi re. Such Banki ng Ru le may p r ov ide, i n ter a lia , general guidance as to when the shareholding would be deemed to result in significant influence.
(3) Notwithstanding anything contained in any other law, any person who has taken a decision either to -
(a) dispose, directly or indirectly, of a qualifying shareholding in a credit institution;
(b) reduce, directly or indirectly, a qualifying shareholding so as to cause it to cease to be a qualifying
shareholding; or
(c) reduce, directly or indirectly, a qualifying shareholding so that the proportion of the voting rights or
of the capital held would fall below twenty per centum, thirty per centum or fifty per centum or so that the credit institution
would cease to be its subsidiary,
shall notify the competent authority in writing of any such decision indicating the size of the intended shareholding and providing
any rel e van t i n form ati on as an d i n the manner that the competent authority may by a Banking Rule require.
(4) Subarticles (1), (2) and (3) shall apply irrespective of whether or not any of the relevant shares are shares listed
on any regulated market within the meaning of the Financial Markets Act or on an equivalent market in a third country.
(5) It shall be the duty of a credit institution and of the directors thereof, to notify the competent authority forthwith
upon becoming aware that any person decides to take any of the actions set out in subarticles (1), (2) or (3).
(6) If any person takes or decides to take any action set out in subarticle (1) or (3) without notifying the competent authority
or o b taini ng i t s ap proval in t e rms of art i cle 13A, then, wi thou t prejudice to any other penalty which may be imposed
under this Act , the comp et ent auth orit y shall have the p o wer t o make an order:
Cap. 345.
(a) restraining such person or credit institution from taking, or continuing with, such action;
(b) declaring such action to be void and of no effect;
(c) requiring such person or credit institution to take such steps as may be necessary to restore the position existing immediately
before the action was taken;
(d) restraining such person or credit institution from exercising any rights which such action would, if lawful, have
conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or credit institution from taking any similar action or any other action within the categories
set out in subarticles (1) and (3).
(7) Without prejudice to any other provision of this Act, where the influence exercised by any person acquiring or proposing to
acquire a qualifying shareholding is, or is likely to, operate against t h e sou nd an d p r udent management of a credi t in stit
uti on, the competent authority may exercise any of its powers under this Act t o p u t an end to such sit u atio n, i n clud ing
th e power to issue directives as it may deem reasonable in the circumstances.
(8) The competent authority, may, by means of a Banking Rule issued under this Act indicate the circumstances when persons are
to be regarded as "acting in concert".
Assessment procedure. Added by: XVII. 2009.18. Amended by: II. 2011.14.
(2) The competent authority shall have a maximum of sixty working days as from the date of the written acknowledgement of receip
t o f t h e no tif icat ion requ ired u n d e r ar ticle 1 3 (1 ) and all documents required by the competent authority to be attached
to such notification (h ereinafter re ferred to in this Act as t h e "assessment period") to carry out the assessment on
the basis of such information as may be determined by a Banking Rule issued for this purpose.
(3) The competent authority shall inform the proposed acquirer of the date of the expiry of the assessment period at the time
of acknowledging receipt.
(4) The competent authority may, during the assessment period, if necessary and no later than on the fiftieth working day of such
period, request any further info rmati on that i s n e cessary to complete the assessment. Such a request shall be made in writing
and shall specify the additional information needed.
(5) During the period between the date of request for additional info rmation by th e comp et en t aut hori t y and th e receipt
of a response thereto by the proposed acquirer, the assessment period shall be interrupted. The inte rruption period shall not e
x ceed t w enty working days. Any further requ ests b y th e com p etent authority for completion or clarification of the information
shall be at it s discretion b u t shall no t result in an int e rruption of such period.
(6) The competent authority may extend the interruption period r e fer r ed to i n sub a rti c le ( 5 ) up to t h ir ty wor k
in g day s if the proposed acquirer is:
(a) situated or regulated in a third country; or (b) a person not subject to supervision under: (i) the Capital Requirements Directive;
(ii) Council Directive 85/611/EEC of 20 December
1985 on the co-ordination of laws, regulations and administrative provisions relating to
undertakings for collective investment in transferable securities (UCITS);
(iii) Council Directive 92/49/EEC of 18 June 1992 on the co-ordination of laws, regulations and administrative provisions relating to direct insurance
other than life assurance and amending Directives 73/239/EEC and 88/357/ EEC (third non-life insurance Directive);
(iv) Directive 2002/83/EC of the European
Parliament and of the Council of 5 November
2002 concerning life assurance;
(v) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC; or
(vi) Directive 2005/68/EC of the European
Parliament and of the Council of 16 November
2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC.
(7) The competent authority shall, upon completion of the assessment referred to in subarticle (2) and not later than the
date of the expiry of the assessment period, issue a notice:
(a) granting unconditional approval to the proposed acquisition;
(b) granting approval to the proposed acquisition subject to such conditions as the competent authority may deem appropriate;
or
(c) refusing the proposed acquisition.
(8) In making the assessment referred to in subarticle (2), the competent authority shall neither impose any prior conditions in
re spec t of the level of sharehol di ng t h at m u st be acq ui red n o r examine the proposed acquisition in terms of the economic
needs of the market.
(9) The competent authority may refuse the proposed acquisition only if there are reasonable grounds for doing
so on the basis of the criteria set out in the Banking Rule referred to in article
13(1) or if the information provided by the proposed acquirer is incomplete.
(10) If the competent authority decides to refuse the proposed acquisition, it shall, within two working days, and not exceeding
the assessm ent peri od, in form the p ropo sed acqui rer in wri ting specifying the reasons for such decision. The competent authority
may, whether at the request of such proposed acquirer or not, issue a public statement indicating such reasons.
(11) If the competent authority does not refuse the proposed acquisition in writing within the assessment period, such proposed
acquisition shall be deemed to be approved.
(12) Without prejudice to any other penalty which may be imposed under this Act, where a qualifying shareholding in a credit
institution is acquired notwithstanding the refusal of the competent authority, the exercise of the corresponding voting rights shall
be suspended an d an y of t h e v o tes cast i n co ntrav e nt ion of this subarticle shall be null and void.
(13) The competent authority may fix a maximum period for co ncludin g the p r oposed acqui si tion an d extend it wh ere appropriate.
(14) Notwithstanding the provisions of subarticles (1) to (6), where two or more proposals to acqu ire or increase qualifyi
ng shareholdings in the same credit institution have been notified to the competent authority, the latter shall treat the proposed
acquirers in a non-discriminatorymanner.
Co-operation with overseas regulatory authorities in the case of
acquisitions.
Added by:
XVII. 2009.18.
(a) a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management
company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed;
(b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking,
investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that
in which the acquisition is proposed; or
(c) the person controlling a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking,
investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that
in which the acquisition is proposed.
(2) The competent authority shall, without undue delay, prov ide any info rmat ion whi c h is essent ial or relev a
n t fo r th e assessment referred to in article 13A(2) to the overseas regulatory authority requesting such information. Upon request,
the competent authority shall communicate to the overseas regulatory authority all relevant information and shall communicate on
its own initiative all essential information. A decision by the competent authority in terms of article 13A shall indi ca te any
views or re servations expressed by the overseas regulatory authority responsible for the proposed acquirer.
Mergers, reconstructions, divisions and changes in share capital or voting rights.
Added by: XVII. 2009.18.
(a) sell or dispose of its business or any significant part thereof;
(b) merge with any other company, whether a credit institution or otherwise;
(c) undergo any re-construction or division; or
(d) increase or reduce its nominal or issued share capital or effect any material change in the voting rights.
(2) It shall be the duty of all directors and qualifying
sh areho l ders of a credi t in stitu tio n to no tify th e comp et en t aut h o r it y f o rth w i t h in wri t i ng upo n beco min
g aware t h at such cred it in st i t u t io n i n te nd s to ta ke a n y of th e ac ti o n s se t o u t in subarticle(1).
(3) Within three months of receipt of such notification or receip t of such inform ation as the competent authority may
lawfully require, whichever is the later, the competent authority shall issue a notice -
(a) granting unconditional consent to the taking of the action;
(b) granting consent to the taking of the action subject to such conditions as the competent authority may deem appropriate; or
(c) refusing consent to the taking of the action,
and if it refuses to grant consent it shall inform the person or the credit institution concerned in writing of the reason for its
refusal.
(4) If any person or any credit institution takes or decides to t a ke an y actio n set o u t in su barti c le (1) w ithout obtainin
g the consent of the competent authority, then, without prejudice to any other penalty which may be imposed under this Act, the competent
authority shall have the power to make an order:
(a) restraining such person or credit institution from taking or continuing with such action;
(b) declaring such action to be void and of no effect;
(c) requiring such person or credit institution to take such steps as may be necessary to restore the position existing immediately
before the action was taken;
(d) restraining such person or credit institution from exercising any rights which such action would, if lawful, have
conferred upon them, including the right to receive any payment or to exercise any voting rights attaching to the shares acquired;
(e) restraining such person or credit institution from taking any similar action or any other action within the categories
set out in subarticle(1).
(2) A credit institution shall forthwith notify to the competent authority -
(a) full particulars of all persons who are controllers or directors of credit institution;
(b) full particulars of any person who is proposed to become a controller or director of the credit institution;
(c) full particulars of any person who is proposed to cease to be a controller or director of the credit institution.
Control of a credit institution. Amended by:
XVII. 2002.170; XX. 2007.96; XVII. 2009.19.
(3) A credit institution shall furnish the competent authority with any further information it may require concerning any existing
or proposed controller or director.
(4) If the competent authority is of the opinion that any person who is or is proposed to become a controller or director of a
credit institution is not a suitable person to be a controller or director, the competent authority may make an order requiring such
a person to cease to be a controller or director or restraining such a person from becoming a controller or director.
(5) For the purposes of this article control includes the power to determine in any manner the financial and operating policies
of a body corporate, the power to appoint or remove the majority of the members of the board of directors or equivalent governing
body or the power to cast the majority of votes at meetings of the board of directors or equivalent governing body.
Prohibited transactions. Substituted by: XVII. 2002.171. Amended by:
IV. 2003.179;
XX. 2007.85, 97;
L.N. 425 of 2007;
XVII. 2009.20;
II. 2011.15.
Provided that, in any case where unsecured credit facilities are granted, these shall not in the aggregate exceed the sum
of twenty-three thousand, two hundred and ninety-three euro and seventy-three cents (23,293.73);
(ii) to any person in whom or in which the credit institution or any one or more of its directors is interested as a director,
partner, manager, agent or member or to any person of whom or of which any one or more of the credit institution's
directors is a guarantor;
(iii) to any body of persons in which the credit institution or any one or more of its directors jointly or severally
maintains control, not being itself a credit institution or the parent undertaking of the credit institution,
a subsidiary of this parent undertaking or a subsidiary of the credit institution;
and where the competent authority has reason to believe that such favourable terms and conditions have been applied, it shall
have the power to require the credit institution to rectify the position and if the credit
institution fails to take the necessary action to rectify the position as required, the competent authority shall take such measures
as it deems appropriate until the position is rectified;
(c) grant to or permit to be outstanding in respect of any officer other than a director, or any employee, unsecured
credit facilities which in the aggregate exceed twelve months’ emolument of such officer or employee:
Provided that the competent authority may by Banking Rule extend the restrictions listed in paragraphs (a), (b) and (c) or any of them to other officers, employees or shareholders of credit institutions or to other categories of
persons in such manner and to such extent as may be specified;
(d) acquire or hold directly or indirectly any qualifying shareholding in any company which is not another credit institution,
or a financial institution licensed in terms of the Financial Institutions Act, or any other company carrying out an activity which is supervised on a consolidated basis by the competent authority, the original
cost value of which exceeds fifteen per centum of the credit institution’s own funds or its consolidated own funds,
as the case may be:
Provided that:
(i) the limit of fifteen per centum shall apply to any one company or group of connected persons;
(ii) the total amount of such holdings shall not exceed sixty per centum of the credit institution’s
own funds or of its consolidated own funds, as the case may be;
(iii) where the limits established are exceeded due to unavoidable circumstances, the competent authority shall require
the credit institution concerned either to increase its own funds accordingly or to take other equivalent measures
over a transition period, not exceeding twelve months, as may be established by the competent authority;
(iv) shares held temporarily during a financial reconstruction or rescue operation or during the normal course of
underwriting or in a credit institution’s own name on behalf of others shall not be considered as a qualifying shareholding
for the purposes of the limits established under this paragraph;
(v) the competent authority may not apply the limits established under this paragraph where the total excesses are deducted
from the credit institution’s own funds for the calculation of the capital requirements under article 17, and where
Cap. 376.
both limits are exceeded, the greater of the excess amounts shall be deducted from the own funds;
(vi) where the credit institution is a parent or subsidiary undertaking, compliance with the limits laid
down in this paragraph shall be monitored on a consolidated basis;
(e) without the consent of the competent authority acquire or hold shares in another company which is not a credit institution,
which exceeds five per centum of that company's issued share capital or any other subsequent acquisition which exceeds
the per centum amount approved by the competent authority;
(f) purchase, acquire or otherwise hold any immovable property or any right thereon except as may be reasonably necessary
for the purpose of conducting its business or housing or providing amenities for its staff:
Provided that this paragraph shall not prevent a credit institution -
(i) from letting part of any building which is used for the purpose of conducting its business; or
(ii) from securing a debt on any immovable property and, in the event of default in payment of such debt, from acquiring or holding
such property, for realisation within twelve months, or any longer period as may be determined by the competent authority;
(iii) in other instances from acquiring immovable property with the prior approval of the competent authority
the original cost of which property shall not in the aggregate exceed five per centum of the credit institution’s own funds.
(2) In subarticle (1)(b) and (c) the expression "unsecured credit facilities" shall mean credit facilities made without security or, in respect of any
credit facility made with security, any part thereof which at any time e x ce eds th e market va lue of the assets constituting that
security, or whe r e the c o mpetent a u thority is satisfied that there is no established market value, on the basis of a valuation
approved by the competent authority itself.
Supervision on a consolidated basis. Added by:
XVII. 2002.172. Amended by: XX. 2007.85.
Large exposures.
Amended by:
XX. 2007.85.
16A. (1) Without prejudice to the minimum level of the capital requirements l ai d dow n in the Bankin g Rule issued in terms of articl
e 17(1), the own fund s of a cr edit instit utio n m ay not fall below th e am ount of in iti al capi tal est abli sh ed i n i ts
li cence in terms of article 7(1)(a) or such higher amount as may be required by the competent authority from time to time.
(2) A specific own funds requirement in excess of the minimum level laid down in the above mentioned sub-article
shall b e impo s ed by th e co mpetent au tho r it y at least on the credi t institut ions whi ch do n ot m eet the requ irem en
ts laid do wn in a Banking Rule and in article 17B of this Act, or in respect of which a negative determination has been made on
the issue described in article 17D(3) of this Act, if the sole application of other measures is unlikely to improve the arrangements,
processes, mechanisms and strategies sufficiently within an appropriate timeframe.
(3) In certain specific circumstances and with the written approval of the competent authority, where there is a merger
of two or more credit institutions, the own funds of the credit institutions resulting from the merger may not fall below the total
own funds of the merged credit institutions at the time of the merger as long as the level specified in article 7(1)(a) have not been attained.
(4) Where the amount of own funds of a credit institution falls below the amount established under subarticle (1), the competent
authority shall require that credit institution to take the necessary measures to restore the level of own funds within such period
as the competent authority may determine:
Provided that if the level of own funds of a credit institution i s not r e stored within the determined perio d , the competen t
authority may, in addition to the power to impose an administrative penalty, exercise any of the powers granted to it under the
provisions of article 9(2).
(5) The competent authority shall issue a Banking Rule as it shall consider appropriate for the regulation of own funds.
Own funds.
Added by:
XVII. 2002.173.
Amended by:
XX. 2007.85, 98;
XVII. 2009.21.
(a) maintain capital requirements to risk-weighted and notional risk-weighted assets as defined in and calculated
according to the provisions of a Banking Rule;
(b) notify the capital requirements to the competent authority at such times and in such manner as shall be prescribed
by a Banking Rule;
(c) notify the competent authority forthwith upon the capital requirements falling below the level required by paragraph (a) whereupon the competent authority shall require the credit institution, to the exclusion of an electronic money institution,
to take necessary measures to restore the capital requirements to the required level within such period as the
competent authority may determine.
Capital adequacy. Amended by: XVII. 2002.174; XX. 2007.85, 99; III. 2009.19;
XVII. 2009.22; II. 2011.16.
(2) Where the level of the capital requirement of a credit in st it uti o n is no t r e st ored wi th in th e determi n ed perio d , th e competent authority may in addition to the power to impose an adminis trative penalty, exercise any of the powers granted to it under the provisions of article 9(2).
Bad and doubtful debts.
Added by:
XVII. 2002.175.
Amended by:
XX. 2007.85, 100.
Substituted by:
XVII. 2009.23.
Amended by:
II. 2011.17.
(2) The competent authority may issue a Banking Rule as it shall consider appropriate for the regulation of provisioning for bad and doubtful debts.
Internal governance. Added by:
XX. 2007.101. Amended by:
III. 2009.20; II. 2011.18.
(2) Such arrangements, processes and mechanisms referred to in subarticle (1), shall be comprehensive and proportionate to the nature, scale and complexity of the credit institution’s activities. Credit institutions shall take into account the technical criteria laid down in a Banking Rule.
Credit institutions’ internal capital adequacy assessment
process.
Added by:
XX. 2007.101.
Amended by:
II. 2011.19.
Supervisory review and evaluation process.
Added by:
XX. 2007.101.
Amended by:
II. 2011.20.
17C. All credit institutions shall have in place sound, effective and complete strategies and processes to assess and maintain on an on-going
basis, the amounts, types and distri bution of inte rnal capital that they consider adequate to cover the nature and level of risks
to which they are or might be exposed. These strategies and processes shall be subject to regular internal review to ensure that
they remain comprehensive and proportionate to the nature, scale and complexity of the activities of the credit institution concerned.
The competent authority shall issue a Banking Rule providing for, inter alia the internal capital adequacy assessment process that has to b e m a i n tain ed b y credi t in st it ut io ns in relat i o n to th
eir ri sk profile.
17D. (1) In carrying out its supervisory review and evaluation process, the competent authority shall review the arrangements, strategies,
processes and mechanisms implemented by the credit inst itut i on s to compl y with thi s Act, an d any regul at ion s or Banking
Rules made thereunder and the technical criteria set out in An nex XI of the Capit a l Requirements D i rective , in ord e r to evaluate the risks to which the credit institutions are or might be exposed.
(2) The scope of such review and evaluation referred to in subarticle (1) shall be that of the requirements of this Act
and any regulations or Banking Rules made thereunder.
(3) On the basis of such review and evaluation referred to in
subarticle (1), the competent authority shall determine whether the arrangements, strategies, processes and mechanisms implemented
by the credit institutions and the own funds held by these ensure a sound management and coverage of their risks.
(4) The competent authority shall establish the frequency and intensity of such review and evaluation referred to in subarticle
(1) having regard to the size, systemic importance, nature, scale and complexity of the activities of the credit institution concerned
and taking into account the principle of proportionality. Such review and evaluation shall be updated at least on an annual basis.
(5) Such review and evaluation performed by the competent authority shall include the exposure of credit institutions to the interest
rate risk arising from non-trading activities.
(a) periodic statements showing its assets and liabilities and profit and loss position on an individual and, where appropriate,
on a consolidated basis including analysis thereof;
(b) such information as is required by the competent authority for prudential and statistical purposes;
(c) such information as the competent authority may require to satisfy itself that the credit institution is complying
with the provisions of this Act and any regulations or Banking Rules made thereunder;
(d) such separate statements relating to its offices and branches outside Malta in such form and at such times as the competent
authority may require in the discharge of its duties.
(2) A credit institution shall submit to the Central Bank such information as the Central Bank may require in the discharge of
its d u ties and t h e Cent ral Bank may enqui re in to and ask for clarification of any information so submitted.
(3) The provisions of this article shall also apply to all branches, agencies or offices in Malta of a credit institution
which is not licensed in Malta.
(4) All statements required under subarticle (1) shall be submitted in such form and at such periods as shall be prescribed
by Banking Rule.
(5) All statements and other information furnished by any credit institution under subarticles (1) and (2) shall be regarded
as secret and confidential except as between that credit institution and the competent authority or the Central Bank as the case
may be
Liquidity. Amended by: XVII. 2002.176;
XX. 2007.85, 102.
Information to be submitted to the competent authority and the Central Bank. Amended by: XVII. 2002.177;
XX. 2007.85, 103; XVII. 2009.24;
II. 2011.21.
save that the competent authority shall furnish such information under this article as may be required by the Minister or the Central Bank and shall inform the Minister and the Central Bank if at any time in its opinion there is concern regarding the state of affairs of that credit institution.
Outsourcing service providers. Added by:
XX. 2007.104. Amended by: II. 2011.22.
(2) The competent authority may issue a Banking Rule laying do wn th e r e qu ir emen ts fo r th e reco gni ti on of t h e out sou r ci ng service provider and the provision of such outsourced services.
Supervision of credit institutions. Amended by:
XVII. 2002.178; XX. 2007.105;
XVII. 2009.25; II. 2011.23.
(2) Any request for information or for clarification thereof un der th is ar ti cl e sh all be made b y no ti ce in wri
t i ng and sh al l require the recipient to provide the information at such tim e or times or at such intervals or in respect of
such period or periods as may be specified by the notice.
(3) Further, the competent authority may -
(a) by notice in writing served on a credit institution, require the credit institution to provide a report by an accountant
or other person with relevant professional skill on, or on any aspect of, any matter about which the competent authority has required
or could require the credit institution to provide information under subarticle (1);
(b) by notice in writing served on a credit institution, require it to produce within such time and at such place
as may be specified in that notice, such document or documents of such description as may be so specified in the
notice;
(c) authorise an officer, servant or agent of the competent authority, on producing evidence of his authority, to require any credit
institution to provide him forthwith with such information, or to produce to him forthwith such documents, as he may specify,
being such information or documents as the competent authority may reasonably require for the performance of its functions
under this Act and any regulations or Banking Rules made thereunder.
(4) The accountant or other person appointed by a credit institution to make any report required under subarticle (3)(a) shall be a person nominated or approved by the competent authority; and the competent authority may require the report to be in
such form as is specified in the notice.
(5) Where, by virtue of subarticle (3), any person has power to require the production of any documents from a credit institution,
that person shall have the like power to require the production of those documents from any person who appears to be in possession
of them.
(6) The power under this article to require a credit institution or any other person to produce any documents includes power -
(a) if the documents are produced, to take copies of them or extracts from them and to require that credit institution or
person, or any other person who is a present or past officer of, or is or was at any time employed by or acting
as an employee of, the credit institution in question, to provide an explanation of any of them; and
(b) if the documents are not produced, to require the person who was required to produce them to state, to the best of
his knowledge and belief, where they are.
(7) If it appears to the competent authority to be desirable in the interests of the depositors or potential depositors of a credit
institution to do so, or if otherwise required to fulfil its supervisory responsibilities, it may also exercise the powers conferred
by subarticles (1) and (3) in relation to any person who is or has at any relevant time been -
(a) a holding company, subsidiary or a company which is a connected person of that credit institution;
(b) a subsidiary or a person which is a company connected to a holding company of that credit institution;
(c) a holding company of a subsidiary of that credit institution; or
(d) a controller of that credit institution; or
(e) an outsourcing service provider of that credit institution.
(8) The competent authority may by notice in writing served on any p e rson wh o is or is to be an o fficer of a credit i n st
itutio n require him to furnish, within such time as may be specified in the notice, such information or documents as the competent
authority may reasonably require for determining whether he is a suitable person to hold the particular position which he holds or
is to hold.
(9) The competent authority may exercise the powers conferred by subarticles (1) and (3) in relation to any person who h a s a
qualifying shareholding in a credit institution if it considers that the ex erci se of those powers is desi rable in the interests
of t h e depositors or potential depositors of that credit institution.
(10) A statement made by a person in compliance with a requirement imposed by virtue of this ar ticle may be used in evidence
against him.
(11) The competent authority shall have the power to recover from a credit institution reported on under subarticle (3) the costs
and expenses incurred in relation to such report.
Right of entry to obtain information and documents.
(a) enter any premises occupied by a person on whom a notice has been served under article 20 above or article
22 below for the purpose of obtaining there the information or documents required by that notice;
(b) enter any premises occupied by any person on whom a notice could be served under article 20 above or article
22 below for the purpose of obtaining there such information or documents as are specified in the
authority, being information or documents that could have been required by such a notice; but the competent authority shall not authorise
any person to act under
this paragraph unless it has reasonable cause to believe that if such a notice were served it would not be complied with
or that any documents to which it would
relate would be removed, tampered with or destroyed:
Provided that where an entry as is mentioned in this subarticle involves premises that are occupied for the purposes of habitation,
such entry shall be carried out in the presence of an officer of the Police of a rank not below that of inspector and shall moreover
not take place between nine in the evening and five in the morning.
(2) No person shall intentionally obstruct a person exercising rights conferred by this article.
Investigations. Amended by: XVII. 2002.179; XX. 2007.106; XVII. 2009.26; II. 2011.24.
(a) the nature, conduct or state of the credit institution’s business or any particular aspect of it, or
(b) the ownership or control of the credit institution,
and the competent authority shall give written notice of any such appointment to the credit institution concerned.
(2) If a person appointed under subarticle (1) thinks it neces sa ry for the purpos es of his inves tigation,
he may a l s o investigate the business of any person who is or has at any relevant time been -
(a) a holding company, subsidiary or a company which is a connected person of the credit institution under investigation;
(b) a subsidiary or a company which is a connected person of a holding company of that credit institution;
(c) a holding company of a subsidiary of that credit institution; or
(d) a controller of that credit institution; or
(e) an outsourcing service provider of that credit institution.
(3) The competent authority may exercise the powers conferred by subarticle (1) in relation to any person who has a qualifying
shareholding in a credit institution if it considers that the exercise of those powers is desirable in the interests of the depositors
or potential depositors of that credit institution.
(4) Where a person appointed under subarticle (1) decides to investigate the business of any person by virtue of subarticle (2)
or subarticle (3) he shall inform that person by notice in writing.
(5) It shall be the duty of every person who is or was an officer, empl oyee, agent, b a nker or audit o r of a body whi c h is
under investigation under this Act and any regulations or Banking Rules made t h ereund er, o r any person appo int e d to make a
repor t i n respect of that body under this Act and any regulations or Banking Rul e s made ther eu nd er and any o n e wh o
has a qual i fy in g shareholding in, or is a controller of that body -
(a) to produce to the persons appointed under subarticle (1), within such time and at such place as they may require, all documents
relating to the body concerned which are in his custody or power;
(b) to attend before the persons so appointed at such time and place as they may require; and
(c) otherwise to give those persons all assistance in connection with the investigation which he is reasonably
able to give,
and tho s e pe rson s m a y t a ke copi es of o r e x tracts from any documents produced to them under paragraph (a) above.
(6) A person exercising powers by virtue of an appointment under this article shall, if so required, produce evidence of his authority.
(7) No person shall -
(a) without lawful excuse fail to produce any documents which it is his duty to produce under subarticle (5);
(b) without lawful excuse fail to attend before the persons appointed under subarticle (1) when required to do so; or
(c) without lawful excuse fail to answer any question which is put to him by persons so appointed with respect to
any credit institution which is under investigation or a body which is being investigated by virtue of subarticle (2)
or (3).
(8) A statement made by a person in compliance with a requirement imposed by virtue of this ar ticle may be used in evidence
against him.
(9) The competent authority shall have the power to recover
from a credit institution reported on under subarticle (1) the costs and expenses incurred in relation to such report.
(10) For the purposes of this article, reference to a credit instit ution shal l inclu d e referen c e to person s app e
aring to b e carrying out the business of banking.
Suspected offences. Amended by: XX. 2007.107; II. 2011.25.
(a) to provide at such place as may be specified in the notice and either forthwith or at such time as may be so specified, such
information as it may reasonably require for the purpose of investigating the suspected offence;
(b) to produce, at such place as may be specified in the notice and either forthwith or at such time as may be so specified, such
documents, or documents of such description as may be specified which it may reasonably require for that purpose;
(c) to attend at such place and time as may be specified in the notice, and answer questions relevant for determining
whether such an offence has occurred.
(2) The competent authority or their duly authorised officer, employee or agent may take copi e s o f o r ex tr ac t s fr om
an y documents produced under this article.
(3) Any officer, employee or agent of the competent authority may, between five o'clock in the morning and nine o'clock
at night, on producing if required evidence of his authority, enter any premises occupied by a person on whom a notice has been
served under subarticle (1) for the pu rpo s e of ob taini n g th ere th e inform ation or documents requ ired by the notice, putting
the qu esti on s ref e r r ed to i n par a g r ap h ( c ) of th at sub a rti c le or exercising the powers conferred by subarticle (2).
(4) No person shall without lawful excuse fail to comply with a requirement im posed on him under th is arti cle or intentio na
ll y obstruct a person in the exerci se o f the ri gh ts co nferred by subarticle (3).
(5) A statement made by a person in compliance with a requirem e nt im posed by virtue of this article may be used in
evidence against him.
Obstruction. Amended by: XX. 2007.108.
(a) under article 20, article 22 or article 23 ; or
(b) into the suspected commission of any offence under this Act,
may falsify, conceal, destroy or otherwise dispose of, or cause or
permit the falsification, concealment, destruction or disposal of, documents which he knows or suspects are or would be relevant
to such an investigation unless he proves that he had no intention of concealing facts disclosed by the documents from persons carrying
out such an investigation.
(2) The competent authority may further, on the basis of Malta’s international commitm en ts, disclose inform ation
to overseas regulatory authorities.
(3) The competent authority may also conclude co-operation agreements, providing for exchange of inform ation, with third countries
or with authorities or bodies of third countries as defined in Articles 47 and 48(1) of the Capital Requirements Directive, if such information disclosed is subject to guarantees of professional secrecy as provided for under th is Act and any regul ation
s or Banking Rules made thereunder:
Provided that such exchange of information shall be for the purpose of performing the supervisory tasks of the authorities or bodies
mentioned in this subarticle:
Provided further that where the information originates in another Member State, it may not be disclosed without the express agreement
of the overseas regulatory authority which has disclosed it, and where appropriate, solely for the purposes for which such overseas
regulatory authority gave its agreement.
(4) The competent authority may disclose information under the provisions of subarticle (2) only to the extent that the overseas
regulatory authorities receiving the information restrict its use for supervisory and regulatory purposes or for such other purposes
as may specifically be agreed upon with the competent authority.
(5) The competent authority may further, on the basis of international agreements, or upon reciprocity agreements, authorise
overseas regulatory authorities to carry out themselves, or through t h e i n termediation of co mpetent p e rsons they appoi nt,
on-site inspections for supervisory and regulatory purposes in branches or subsidiaries of credit institutions having their head
office in the country of the overseas regulatory authority making the inspection.
(6) The competent authority shall further, upon a request in writing, disclose to the Central Bank, central banks of the European
system of the central banks, other overseas central banks, other bodies with a similar fun c tion i n thei r capacity as m onetary
authorities when this information is relevant for the exercise of their respective statutory tasks, including the conduct of monetary
p o li cy and r e l a ted liq uid ity pro v isio n, ov er si ght of payments, cl eari ng and settlement systems and the safeguardin
g of t h e stability of the financial system. The competent authority shall
Co-operation and sharing of information. Amended by: XVII. 2002.180; IV. 2003.180;
XX. 2007.109; XVII. 2009.27;
II. 2011.26.
also, upon a request in writing and where appropriate, disclose to other authorities responsible for overseeing payment systems, any
information in the possession of or accessible to the competent authority, which is required for the discharge of the duties of the
Central Bank and the other authorities mentioned above, under the law:
Provided that in an emergency situation as referred to in article 25B(5), the c o mpetent authority s h all communicate information
to the central banks of the European system of central banks and the Central Bank when this information is relevant for the exercise
of their statutor y tasks, in cludi ng t h e con duct of monetary policy and related liquidity provision, the oversight of payments,
clearing and settlement systems, and safeguarding the stability of the financial system:
Provided further that where the information is subject to professional secrecy, the competent authority may authorise the disclosure
of certain information to other government departments of oth e r Mem b er S t at es’ cen t ral go vernmen t adm i ni strati ons
responsible for legislation on the supervision of credit institutions solely where necessary for reasons of prudential control.
(7) The competent authority may further communicate information, received inter alia under the provisions of this Act, to a clearing house or other similar body recognised under national law fo r t h e pro v isio n
o f clearing or set tlemen t servi c es of th e releva nt national market, if it c o nsiders that it is neces sary to commun i ca
te su ch i n format ion i n orde r to ens u re the prop er funct i o n in g o f t h ese b odi es in rel a ti on to default s or po
tent ial defaults by market participants:
Provided that the information received under this article shall be subject to the conditions of professional secrecy:
Provided further that the information received under this subarticle may not be disclosed by the competent authority without the express
consent of the overseas regulatory authority which had disclosed it.
(8) There shall be meetings held between a credit institution, its appointed auditors and the competent authority on a trilateral
or bilateral basis as circumstances may warrant. These meetings may b e cal led by any of t h e p a rt ies co ncerned but sha ll
alway s be chaired by the competent authority.
Co-operation and sharing of information with respect to supervision on a consolidated basis. Added by:
XX. 2007.110. Amended by: XVII. 2009.28; II. 2011.27.
25A. (1) The competent authority shall co-operate closely with o v er seas reg u l a tor y aut hor it ies i n a ll mat t er s wi th r
e sp ect to supervision on a consolidated basis. In particular such co-operation shall include the provision to the overseas regulatory
authority of any information which is essential or relevant for the exercise of the overseas regulatory authorities’ functions
under the Capital Requireme nts Directive. I n this regard the competent autho rity shall com municate up on request all relevant information and it shall communicate on
its own initiative all essential information.
(2) For the purposes of this article, information shall be regarded as essential if it could materially influence the assessment
of th e financial soun dness of a credit institut i on or fin a n c i a l institution in another Member State or EEA State and shall
include, in particular, the following items:
(i) identification of the group structure of all major credit institutions in a group;
(ii) identifying the supervisory authority or the overseas regulatory authority of the credit institutions in the group,
as the case may be;
(iii) procedures for the collection of information from the credit institutions in a group and the verification of that information;
(iv) adverse developments in credit institutions or in other entities of a group, which could seriously affect the credit institutions;
and
(v) major sanctions and exceptional measures taken by the competent authority in accordance with this Act and any regulations
or Banking Rules made thereunder including the imposition of an additional capital charge in terms of article 16A and
the imposition of any limitation on the use of the Advanced Measurement Approach for the calculation
of the credit institution’s own funds requirements as provided for in a Banking Rule issued by
the competent authority.
(3) The competent authority may, on the basis of written co ordi nation and coo p eratio n ar rangement s, entrust addi
tional function s to an overseas r e gu latory auth ority respo n si ble for supervision on a consolidated basis and may specify
procedures for the decision making process and for its cooperation with overseas regulatory authorities.
(4) The competent authority shall, prior to its decision, consult overseas regulatory authorities with regard to the following
items, in so far as the decisions referred to in the preceding subarticle are of importance for such overseas regulatory authorities’
supervisory functions:
(a) changes in the shareholding, organisational or management structure of the credit institutions in a group,
which require the approval or authorisation of the overseas regulatory authorities; and
(b) major sanctions or exceptional measures taken by the competent authority, including the imposition of an additional capital
charge in terms of article 16A and the imposition of any limitation on the use of the Advanced Measurement Approach for
the calculation of the credit institution’s own funds requirements for operational risk under a Banking Rule.
(5) The competent authority shall, in all cases, consult with the overseas regulatory authorities responsible for supervision on
a consolidated basis with respect to the items described in sub-article (4)(b), provided that the competent authority may decide not to
co nsult in cases of urgency or where such consul tati on mig ht jeopardise the effectiveness of it s dec i sions. In this cas e,
the comp etent authority shal l, withou t delay, inform th e overseas regulatory authorities.
(6) The competent authority may, by bilateral agreement, delegate its responsibility for supervision of the subsidiary of
a parent undertaking which is a credit institution, to the overseas regulatory authority which authorised and supervised the parent
undertaking so that such overseas regulatory authority assumes responsibility for supervising the subsidiary in accordance with the
Capital Requirements Directive. The Commission shall be kept informed of the existence and the content of any such agreements.
(7) Where a parent undertaking is situated in Malta and the co mpetent au tho r ity do es not it self exerci se su pervisi on
on a consolidated basis pursuant to Articles 125 and 126 of the Capital R e qui re men t s D i recti v e , the competent auth orit y sh all , up on request by the o v erseas regul atory aut hority resp onsib le for ex ercisi ng su ch
su perv isio n, requi re t h e p a ren t u ndertaki ng to provide any information relevant for the purposes of supervision on a
consolidated basis and the com petent authority shall transmit such information to the overseas regulatory authority making the request.
(8) Where the competent authority is responsible for su pervisi on on a co nsol id ated basi s, it shall , wh
en it need s information which has already been given to an overseas regulatory authority, contact such authority, whenever possible,
in order to avoid duplication of reporting to the various overseas regulatory authorities involved in supervision.
(9) Where the competent authority is the home supervisor of a paren t credit in stitu tio n i t shall commun i cate t o t h e ov
erseas regulatory authorities of the host Member State, where a significant branch is established, the info rmation referred to in
subarticle (2)(iv) and (v) and carry out th e tasks referred to in articl e
25B(1)(c) in cooperation with the overseas regulatory authorities of the host Member State.
(10) (a) The competent authority, in its role as consolidating supervisor, shall establish colleges of supervisors, as prescribed in
a Banking Rule, to facilitate the exercise of the tasks referred to in Articles 129 and 130(1) of the Capital Requirements Directive and subject to the confi d entiali ty r e qu iremen ts of thi s Act, and compatibi lity wi th Euro pean Commu nity law, and
shall ensure appropriate coordination and cooperation with relevant third cou n try overseas regulatory authorities where appropriate.
(b) The competent authority, in its role as consolidating supervisor, shall ensure that there is close co-operation between all
the overseas regulatory authorities participating in the colleges of supervisors. The confidentiality requirements
prescribed in this Act shall not prevent the exchange of confidential
information within colleges of supervisors. The establishment and functioning of colleges of supervisors
shall not affect the rights and responsibilities of the competent authority under this Act.
(11) Where the competent authority is not a consolidating supervisor and where the competent authority is the supervisor of
a credit institution with significant branches in other Member States, it shall establish and chair a college of supervisors to facilitate
the cooperatio n in terms of this article and article 25 . The esta bl ishment and functi oning of the college shall be
based on written arrangem e nts determined after consultation with the overseas regulatory authorities concerned. The competent authority
shall decide which overseas regulatory authorities participate in a meeting or in an activity of the college.
(12) The competent authority shall, in the exercise of its general duties, duly consider the potential impact of its decisions on
the stability of t h e f i nancial system in all other Member S t ates concerned and, in particular, in emergency situations, based
on the information available at the relevant time.
(a) co-ordination of the gathering and dissemination of relevant or essential information in going concern situations and
emergency situations;
(b) planning and co-ordination of supervisory activities in going concern situations, including the activities referred
to in articles 16A, 17C and 17D and in a Banking Rule, in cooperation with the overseas regulatory authorities
involved;
(c) planning and co-ordination of supervisory activities in co-operation with the overseas regulatory authorities involved, and if
necessary with the Central Bank and with other central banks in other Member States, in preparation for and during emergency
situations, including adverse developments in credit institutions or in financial markets using, where possible, existing defined
channels of communication for facilitating crisis management.
(2) The planning and coordination of supervisory activities referred to i n subarticle (1)( c ) includes e x ceptional meas ures referred to in article 25A(5), the preparation of joint assessments, the implementation of contingency
plans and communication to the public.
(3) Where the competent authority is the consolidating supervisor, the overseas regulatory authority of the host Member
Competent authority as consolidating supervisor. Added by:
II. 2011.29.
Verification of information in specific cases. Added by:
XX. 2007.110.
Re-numbered by:
II. 2011.28.
Amended by:
II. 2011.30.
State may make a request to the competent authority, for a branch of the credit i n sti t ution to be considered as sig n ificant.
The competent authority shall issue a Banking Rule determining the reasons for considering the branch as significant.
(4) The competent authority in its role as consolidating supervisor shall, s u bject to arti cle 25, alert as soon
as it is practi cable th e authorit y referred to in subarticle (7) and shall communicate all information that is essential for
the pursuance of their ta sks, where an emergenc y situation, i n clu d ing adverse develo pmen ts i n fin a n c ial mar k ets, ar
ises, whi c h p o ten tial l y jeopardises the market liquidity and the stability of the financial system in any of the Member States
where entities of a group have been authorised or where significant branches are established.
(5) If the competent authority becomes aware of an emergency situation, it shall alert as soon as it is practicable the ove rsea
s regulatory authorities referred to in Articles 125 and 126 of the Capital Requirements Directive.
(6) Where possible, the competent authority and the central banks of the European system of central banks shall use existing
defined channels of communication.
(7) If the competent authority as home supervisor of a parent credit institution becomes aware of an emergency situation within
a credit institution as referred to in subarticle (4), it shall alert as soon as practicable the central banks of the European
system of central banks when this information is relevant for the exercise of their statutory tasks including the conduct of monetary
policy and related liquidity provision, the oversight of payments, clearing and settlement systems, and safeguarding the stability
of the financial sys t em and, as the c a s e ma y be, those other g overnment departments responsible for legislation on
the supervision of credit
institutions. Such disclosures may only be made where necessary for reasons of prudential control.
25C. (1) In specific cases referred to in the provisions of this Act and Banking Rules implementing the Capital Requ irements Directive, the co mp ete n t aut horit y may req u es t an ove rse a s reg u lato ry auth orit y to verify in formatio n concernin g a cred
it institution, a financial holding company, a financial institution, an ancillary services undertaking, a mixed-activity holding
company or its subsidiary situated in another Member State or EEA State and, a subsidiary wh ich is no t included within t h e scope
of supervision on a consolidated basis exercised by the competent authority.
(2) In the cases referred to in the preceding subarticle the competent authority may:
(i) request the overseas regulatory authority to enable the competent authority to carry out the verification itself;
(ii) request the overseas regulatory authority to carry out the verification on its behalf;
(iii) in cases where it does not carry out the verification itself, request to participate in the carrying out of such
verification; or
(iv) request the overseas regulatory authority to appoint an auditor or expert to carry out such verification.
(3) Where the competent authority receives a request to verify information from an overseas regulatory authority -
(i) where an overseas regulatory authority makes a request to the competent authority to carry out the verification
of the information, the competent authority shall allow the overseas regulatory authority making the request to carry
out such verification;
(ii) where the overseas regulatory authority makes a request to the competent authority to carry out the verification,
the competent authority shall carry out the verification itself on behalf of the overseas regulatory authority;
(iii) where the overseas regulatory authority requests the competent authority to participate in the verification of the information
in those cases where the overseas regulatory authority does not carry out the verification itself, the competent authority
shall allow the overseas regulatory authority to participate in such verification; or
(iv) where the overseas regulatory authority so requests, the competent authority shall appoint an auditor or expert to carry
out such verification.
(4) In this article, a financial holding company, a financial institution, an ancillary services undertaking and a mixed-activity
holding company shall have the same meaning as that assigned to them by Article 4 of the Directive.
(a) an auditor of a credit institution; or
(b) a person appointed to make a report under article
20(3)(a) or article 22(1),
may be subject, shall be regarded as contravened by reason of his communicating in good faith to the competent authority, whether
or not in response to a request made by it, any information or opinion on a matter to which this article applies and which is relevant
to any function of the competent authority under this Act and any regulations or Banking Rules made thereunder.
(2) In relation to an auditor of a credit institution this article applies to any matter falling within article 31(9).
(3) In relation to a person appointed to make a report under article 20(3)( a ), th is ar ticl e ap pl ies t o an y matter of wh ich he becomes aware in his capacity as the person making the report and which
-
Communication by auditors, etc., with the competent authority.
Amended by: XVII. 2002.181; XX. 2007.111;
II. 2011.31.
(a) relates to the business or affairs of the credit institution in relation to which his report is made or
Joint Banking
Committee.
Credit institutions unable to meet obligations. Amended by: XVII. 2002.183; XX. 2007.112;
II. 2011.32.
any associated body of that credit institution; or
(b) if by virtue of article 20(7) the report relates to an associated body of a credit institution, to the business or affairs
of that body.
(4) In relation to a person appointed to make a report under article 22(1), this article applies to any matter of which he becomes
aware in his capacity as the person making the report and which -
(a) relates to the business or affairs of the credit institution in relation to which his report is made or any associated
body of that credit institution, or
(b) if, by virtue of article 22(2), the report relates to an associated body of a credit institution, to the business or affairs of
that body.
(5) In this article "associated body", in relation to an institution, means any such body as is mentioned
in article 20(7) or in article 22(2).
(a) where a credit institution considers that it is likely to become unable to meet its obligations or that it is about to
suspend payment, it shall forthwith inform the competent authority and the Governor of the Central Bank in writing;
(b) where the competent authority becomes aware that a credit institution is likely to become unable to meet its obligations or that
it is about to suspend payment, it shall forthwith inform the Governor of the Central Bank in writing;
(c) where the Central Bank becomes aware that a credit institution is likely to become unable to meet its obligations or
that it is about to suspend payment, it shall forthwith inform the competent authority in writing.
Depositor protection. Added by:
XVII. 2002.184. Amended by:
IV. 2003.181; XX. 2007.113.
(a) require the credit institution forthwith to take such steps as the competent authority may consider necessary
to remedy or rectify the matter;
(b) appoint a competent person to advise the credit institution in the proper conduct of its business;
(c) appoint a competent person to take charge of the assets of the credit institution or any portion of them for the purpose of safeguarding
the interests of depositors;
(d) appoint a competent person to assume control of the business of the credit institution and either to carry on that business or
to carry out such other function or functions in respect of such business, or part thereof, as the competent authority may direct;
(e) require the credit institution to wind up its business or to wind up its business in Malta;
(f) appoint a competent person to act as liquidator for the purpose of winding up the affairs of the credit institution;
(g) fix the remuneration to be paid by the credit institution to any competent person appointed under this subarticle.
(2) Where a competent person is appointed by the competent authority:
(a) under subarticle (1)(b), the credit institution shall act in accordance with the advice given by such person unless and until the competent authority
otherwise directs;
(b) under subarticle (1)(c), the credit institution shall deliver to such person all the assets of which he is placed in charge, and all the powers,
functions and duties of the credit institution in respect of those assets whether exercisable by the company in general
meeting or by the board of directors or by any other person, including the legal and judicial representation of the credit institution,
shall be exercisable by and vest in him to the exclusion of the credit institution;
(c) under subarticle (1)(d), the credit institution shall submit its business to the control of such person and shall provide him with such facilities
as he may require in order to carry on that business or to carry out the functions assigned to him under that paragraph, and
all the powers, functions and duties of the credit institution, whether exercisable by the company in general meeting or
by the board of directors or by any other person, including the legal and judicial
Power of competent authority to take control of credit institutions. Amended by: XVII. 2002.185; XX. 2007.114.
representation of the credit institution in all matters, shall be exercisable by and vest in him to the exclusion of any other person.
(3) Where a person is appointed under subarticle (1)(c) or (d) - (a) any function, power or duty exercisable by any other
person, including the curator of a bankrupt or any
other person appointed by or under any other law, and
relating to any assets or business of which the person appointed under either of the paragraphs aforesaid is
placed in charge or in control, shall, unless or until the competent authority otherwise directs or an express provision of law
specifically provides otherwise, cease
to be so exercisable;
(b) the person appointed under either of the paragraphs aforesaid shall, in respect of such property, partnerships,
firms or other business as the competent authority may specify and in which the credit institution has an interest,
whether directly or indirectly, including any interest arising from advances or loans made or credit facilities
given or any liability undertaken, have such powers, functions and duties, including legal and judicial representation, as the
competent authority may direct, and any such power, function or duty shall be exercisable by and vest in such person
to the exclusion of any other person:
Provided that:
(i) the competent authority shall have power to direct that all or any of the powers, functions or duties aforesaid should
be exercisable by any other person, and in any such case, with effect from such date or dates as the competent
authority may specify and unless and until the competent authority otherwise directs, the powers, functions and
duties to which the direction of the competent authority applies shall be exercisable by and vest in such other person
appointed for the purpose to the exclusion of all others;
(ii) where the competent authority is of the opinion that the credit institution has ceased to have any interest as aforesaid,
it shall direct that any powers, functions and duties exercisable under this paragraph shall cease to be so exercisable,
but any such direction shall not affect anything done or omitted to be done by virtue or by reason of any of the aforesaid
powers, functions or duties;
(c) the person appointed under either of the paragraphs aforesaid shall have the power to require any other person to provide
him with such facilities as he may
deem necessary to carry out any of the powers, functions or duties under this article;
(d) the provision of law relating to bankruptcy and in particular Part III of the Commercial Code shall cease to apply to, and shall cease to operate in respect of any property, partnership, firm or other business specified by
the competent authority under paragraph (b), unless and until, or except to the extent that, the competent authority otherwise directs; and in any such case the person
appointed as aforesaid shall, subject to any directions of the competent authority given in the interest of the creditors,
act as if those provisions did not exist and as if any declaration of bankruptcy had not been made;
(e) any person appointed by the competent authority under any of the provisions of this article shall submit six- monthly reports
of his activities and annual accounts of all transactions carried out by him in the performance of his
functions audited by an independent auditor to the Minister who will place such reports and accounts on the table
of the House of Representatives within fifteen days.
(4) Where a person is appointed under subarticle (1)(f), such person shall be the liquidator of the company for all purposes of law to the exclusion of any other person.
(5) The provisions of this article shall have effect n o t w it hstand in g any o t her pro v isi on of an
y en act m en t, an d notwithstanding any deed, contract, instrument or other document whatsoever.
(6) The foregoing provisions of this article vesting exclusive powers of representation in a person appointed by the competent
authority thereunder shall apply also to any act or proceedings comm enced or institu ted before such represen tation vested as
aforesaid, and in respect of any such act or proceedings any other person acting or purporting to act, or in respect of whom action
is taken, in that capacity shall cease to be a party to, and shall be excluded from, any such act or proceedings.
(7) No person shall in any way obstruct a person appointed under subarticle (1) in the performance of any of his functions,
powers or duties under this article.
(8) In respect of a credit institution operating in Malta and e l s e where the of fices and branche s in Ma lta of that
credit institution shall, if the competent authority so directs and to the exte nt it s o direc t s, be de emed to c o nstitute
a s e parate credit institution.
(9) Upon receipt of a report as is mentioned in subarticle (1), the competent authority shall inform the Central Bank on whether
it intends to take any action pursuant to such report and of any action it intends to take thereon.
Cap. 13.
Minister may make regulations.
Added by:
XVII. 2002.186.
Substituted by:
XX. 2007.115.
Language of regulations. Added by: XIII. 2004.84. Amended by: XX. 2007.117.
Publication of audited financial statements. Amended by: XVII. 2002.187;
XX. 2007.85, 118; II. 2010.5.
Auditors. Amended by: XXV. 1995.434; XVII. 2002.188;
XX. 2007.85, 119.
Cap. 386.
24/EC of the European Parli a ment and of the Cou n cil of th e
European Union of 4 April 2001 on reorganisation and winding-up of credit institutions with respect to credit institutions established
in Malta and of branches of credit institutions established outside
Malta, and different provisions may be made for different cases or classes of cases, and account shall be taken of Malta’s international
commitments in this regard. Such regulations may provide for the
implemen t ation of detailed re -or g a n is ation me as ures and procedures, including the following matters: the publication and
submission of information in such language or languages and in
such newspapers or other publications as may be prescribed; the sub m i s sion o f informati on to credi t ors, and th e man n er
and procedure thereof; the notification to creditors and the procedure
for the submission of claims or representations; measures for the protection of the rights of creditors and other third parties,
including netting arrangements; consultation between the
competent authority and any other regulatory, administrative or judicial authorities in Malta and outside Malta with competence over
the winding-up or re-organisation of credit institutions or of
branches thereof; the publicati on o f d eci si ons relat i ng to such winding-up or re-organisation procedures; the establishm ent
of Bank in g Ru les go vern ing t h e app l i c abi l i t y of th e pro p er or
applicable law and other issues of conflict of laws.
(a) forward to the competent authority and the Central
Bank, and
(b) exhibit in a conspicuous position in each of its offices and branches in Malta and keep so exhibited throughout
the year,
a copy of its audited financial statements drawn up and published in such manner as may be specified in accordance with a Banking
Rule.
31.(1) (a) Every credit institution shall each year appoint an approved auditor or auditors whose duty shall be to repor t o n t h
e f i nancial st atements of the c r edit institution exam ined by them and on all financial statements prepared by the credit institution.
(b) For the purpose of this article an approved auditor shall be a person who is qualified to be an auditor in accordance
with the Companies Act, and holds the authorisation of the competent authority to act as auditor of a credit institution.
(2) If a credit institution fails to appoint an auditor under subarticle (1) or, at any time fails to fill any vacancy
in the office of an auditor, the competent authority shall have the power to appoint an auditor for that credit institution and shall
fix the remuneration to be paid by that credit institution to such auditor.
(3) The auditors’ report shall include statements as to the following matters -
(a) whether they have obtained all the information and explanations which to the best of their knowledge and belief were necessary
for the purpose of their audit;
(b) whether in their opinion, proper books of account have been kept by the credit institution, so far as appears from their examination
of those books,
(c) whether the credit institution’s financial statements dealt with by the report are in agreement with the books
of account;
(d) whether, in their opinion, and to the best of their knowledge and according to the explanations given to them, the
said financial statements give the information required by any law which may from time to time be in force in the
manner so required and give a true and fair view.
(4) The report of the auditors shall be read together with the report of the directors of the credit institution at the annual
meeting of shareholders.
(5) Every auditor of a credit institution shall have the right to demand such information or explanation as he deems necessary
in the performance of his duties from any officer or employee of the credit institution.
(6) A credit institution shall forthwith give written notice to the competent authority -
(a) on the appointment of its auditors;
(b) if it proposes to give notice to its shareholders to -
(i) replace its auditors at the expiration of their term of office;
(ii) remove its auditors before the expiration of their term of office;
(c) if the auditors cease to be auditors of the credit institution for any reason other than those in paragraph (b).
(7) The competent authority may require a credit institution to change its appointed auditors where, in the competent authority’s
opinion, such auditors are considered unfit for this appointment at any time during their term of office.
(8) An auditor shall immediately advise the competent authority if -
(a) he resigns;
Cap. 386.
(b) he does not seek to be re-appointed; or
(c) he decides to qualify the audit report.
(9) If, in his capacity as an auditor of a credit institution or due to a direct request by the competent authority under article
20 or under article 22, an auditor becomes aware of any matter which relates to and may have a serious adverse effect upon the
depositors of th at credi t i n st itu ti on, of th e branc h e s in Ma lta of a credit instit ution whic h is no t li cens ed in
Malta, or of any connected person which is a credit institution, he shall immediately inform the competent authority through the
credit institution’s management or, if circumstances so warrant, directly to the competent authority.
(10) Notwithstanding any of the provisions of the foregoing subarticles, the competent authority may in the case of a credit
i n sti t ut io n n o t lice n sed in Malt a grant exem pt io n b y w a y of Banking Rule from any of the requirements of this article
provided that the same does not materially detract from the main objects of this article.
(11) In so far as the provisions of this article are inconsistent with the provisions of the Companies A ct, the provisions of this article shall prevail and the provisions of the said Act shall, to the extent of the inconsistency, not apply
to credit institutions.
Disqualification of officers.
Amended by: XVII. 2002.188;
XX. 2007.120.
Duties of officers.
Amended by:
XVII. 2002.188;
XX. 2007.85.
shall act or continue to act as an officer of a credit institution.
(a) to secure compliance by the credit institution with all of the provisions of this Act and of its licence or any Banking Rule
or regulation issued under this Act, and
(b) to ensure that no incorrect information is provided either wilfully or as the result of gross negligence.
Confidentiality. Amended by: XVII. 2002.189;
XX. 2007.85, 121; II. 2011.33;
X. 2011.39.
(a) for the purpose of ensuring compliance with any of the provisions of this or any other Act, or
(b) to facilitate monitoring on a consolidated or non- consolidated basis, of the conduct of business of the credit institution,
especially with regard to the monitoring of liquidity, solvency, deposit guarantees, large exposures, administrative
and accounting procedures and internal control mechanisms, or
(c) for the purpose of enabling the Central Bank to satisfy its responsibilities under the Central Bank of Malta Act, or
(d) for the purpose of enabling the Central Bank or the competent authority, as the case may be, to satisfy their respective
obligations arising under Malta’s international commitments.
(2) No person, including past and present officers or agents of a bank, shall disclose any information relating to the affairs
of a bank or of a custom er of a bank which he h a s acquired i n the performance of his duties or the exercise of his functions
under this Act and any regulations or Banking Rules made thereunder except -
(a) when authorised to do so under any of the provisions of this Act and any regulations or Banking Rules and Electronic Money Rules
made thereunder; or
(b) for the purpose of the performance of his duties or the exercise of his functions;
(c) when lawfully required to do so by any court or under a provision of any law;
(d) for the purpose of enabling the Central Bank or the competent authority, as the case may be, to satisfy their respective
obligations arising under Malta’s international commitments; or
(e) when the customer expressly consents, in writing, to the disclosure of information relating to his affairs, to the extent authorised
by the customer.
(3) Where an officer of a credit institution has reason to believe that a transaction or a proposed transaction could involve money
laundering or the funding of terrorism, he shall act in compliance with the reporting and other obligations set out in the regulations
made under article 12 of the Prevention of Money Laundering Act, and any procedu r es and guidance issued thereunder, and such disclosure shall not constitute a breach of confidentiality.
(4) Officers of the competent authority and of the Central Bank, including past and present officers, as well as auditors
or experts acting on behalf of the competent authority or the Central Bank , shall n o t di scl o se in for m atio n obt ai ned fro
m credi t institut ions in t he course of car rying out super visory an d other du ti es and wh ich is governed by th e obligatio
n of professional secrecy, unless such disclosure of information be done in summary or collec tive form, so as not to enable the
identity of the credit institution, to whom such information relates, to be ascertained:
Provided that the said officers, auditors or experts may
Cap. 204.
Cap. 373.
Cap. 376.
Offences and penalties. Amended by: XVII. 2002.190;
XX. 2007.85, 122; L.N. 425 of 2007; II. 2011.34;
X. 2011.40.
divulge such information for the purpose of the performance of their duties or the exercise of their functions, or when lawfully
required to do so by any court or under a provision of any law.
(5) Notwithstanding the provisions of any other law and where necessary for the proper carrying out of it s ac tiv it ies, a cred
it i n stitu tion may comm uni cate any inf o rm ation whi c h is i n it s possession and which is related to the affairs of a customer
to other members of the group of companies of which that institution forms part, which carry out any of the activities referred to
in Schedule I to the Financial Institutions Act, or banking or other equivalent
act ivities which they are du ly licen sed to carry out, or complementary and, or supplementary functions thereto:
Provided that any such communication of information shall be made subject to proper controls and safeguards, so that it shall be the
responsibility of the credit institution to ensure that the said group company member is subject to equivalent obligations of data
protection, confidentiality and care as required under Maltese law;
Provided further that for the purpose of this article, ad vert isin g, mar k eti ng or pro m ot io n, sh al l not , u nder
any circumstances, be considered as necessary for the proper carrying out of the activities of a credit institution.
(a) makes a statement, promise or forecast which he knows to be misleading, false or deceptive, or dishonestly
conceals any material facts; or
(b) recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or
deceptive,
is guilty of an offence if he makes the statement, promise or forecast or conceals the facts for the purpose of inducing,
or is reckless as to whether it may induce, another person (whether or not to the person to whom the statement, promise or forecast
is made or from whom the facts are concealed) -
(i) to make, or refrain from making, a deposit with him or any other person; or
(ii) to enter, or refrain from entering, into an agreement for the purpose of making such a deposit.
(2) Subarticle (1) does not apply unless -
(a) the statement, promise or forecast is made in or from, or the facts are concealed in or from, Malta, or arrangements
are made in or from Malta for the statement, promise or forecast to be made or the facts to be concealed;
(b) the person on whom the inducement is intended to or may have effect is in Malta; or
(c) the deposit is or would be made, or the agreement is or would be entered into, in Malta.
(3) Any person who -
(a) contravenes or fails to comply with any of the provisions of this Act;
(b) contravenes or fails to comply with the provisions of any Banking Rule, regulation or licence condition;
(c) fails to comply with any lawful order or requirement of the competent authority or the Central Bank;
(d) fails to comply with any lawful order or requirement of the Financial Services Tribunal;
(e) fails to comply with any lawful order or requirement of any other person made under this Act and any regulations or
Banking Rules made thereunder;
(f) without reasonable excuse alters, suppresses, conceals, destroys or refuses to produce any document which he is lawfully required
to produce by any person under this Act and any regulations or Banking Rules made thereunder,
shall be guilty of an offence.
(4) Any person who is knowingly a party to, or procures or aids and abets the commission of any offence under subarticles (1) and
(3), shall be guilty of an offence and shall be liable to the same penalties as the principal offender.
(5) The Minister shall issue regulations prescribing penalties for offences against this Act, and such regulations may -
(a) prescribe penalties which are enforceable by prosecution in the courts of Malta;
(b) prescribe different penalties for contraventions of different provisions of this Act and any regulations made thereunder;
(c) prescribe penalties calculated in accordance with the duration of the commission of the offence;
(d) provide for an appeal to the Financial Services Tribunal from any decision of the competent authority to impose
an administrative penalty.
(6) The penalties prescribed by regulations issued under subarticle (5) -
(a) in the case of imprisonment, shall not provide for a sentence of imprisonment greater than two years;
(b) in the case of a fine imposed after a prosecution in the courts of Malta, shall not provide for a fine of less than two hundred
and thirty-two euro and ninety-four cents (232.94) or greater than one million and one hundred and sixty-four thousand and six hundred
and eighty- six euro and seventy cents (1,164,686.70).
(7) The Minister may by regulations provide for administrative penalties which may be imposed by the comp etent authority without
recourse to a court hearing:
Provided that an administrative penalty may not impose a financial penalty greater than one hundred and fifty thousand euro (€150,000)
for each infringement or failure to comply, as the case may be.
(8) No proceedings for an offence under this Act and any regulations made thereunder, other than proceedings imposing
an administrative penalty, shall be commenced without the sanction of the Attorney General.
Administrative penalties. Added by:
XVII. 2002.191. Amended by:
XX. 2007.123.
Cap. 12.
(2) Where the person upon whom such notice is served:
(a) fails to pay to the competent authority the amount of the penalty within a period of thirty days of the service of the notice,
and fails to appeal from the decision of the competent authority to the Financial Services Tribunal; or
(b) appeals to the Financial Service Tribunal and fails within a period of fifteen days from the decision of Tribunal to
pay the administrative penalty as confirmed or as reduced by that Tribunal;
then, in every case, the amount of the administrative penalty, as originally imposed or as reduced, as the case may be, shall be due
to the competent authority as a civil debt, and the provisions of subarticle (3) shall apply.
(3) A notice as is referred to in subarticle (1), or the decision of the Financial Services Tribunal, as the case may be, shall
upon the service by judicial Act of a copy thereof on the person indicated in the notice, constitute an executive title for all effects
and purposes of Title VII of Part I of Book Second of the Code of Organization and Civil Procedure.
Application of Act to the Central Bank.
Added by:
XVII. 2002.192.
Amended by:
II. 2010.6;
II. 2011.35.
SCHEDULE
(Article 2(3))
List of Additional Activities
1. Financial leasing;
2. Payment Services as defined in the Financial Institutions
Act;
3. Issuing and administering other means of payment (travellers’ cheques , bankers’ d r afts and sim ilar i
n strumen t s) insofar as this activity is not covered by activity 2 above;
4. Guarantees and commitments;
5. Trading for own account or for account of customers in:
(a) money market instruments (cheques, bills, certificates of deposit, and similar instruments);
(b) foreign exchange;
(c) financial futures and options;
(d) exchange and interest-rate instruments; (e) transferable securities.
6. Participation in securities issues and the provision of services related to such issues;
7. Advice to undertakings on capital structure, industrial str a teg y and related q u estio ns and a d vice a s well a
s services relating to mergers and the purchase of undertakings;
8. Money broking;
9. Portfolio management and advice;
10. Safekeeping and administration of securities;
11. Credit reference services;
12. Safe custody services;
13. Issuing electronic money.
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