Malta: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management
IMF Staff Country Reports, November 21, 2019
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- Canonical URL
- Malta: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management
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Bibliographic details
- Published: November 21, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513520803.002
Scope and objectives
- Analyzes laws, policies, and procedures for bank failure mitigation and resolution, and for preparation and management of a financial crisis in Malta.
- Addresses:
- supervision of bank recovery plans,
- early intervention when problems are identified,
- resolution planning,
- resolution funding,
- deposit insurance.
Key findings
- Implementation of recovery planning requirements for banks remains a work in progress.
- Written policies and procedures should be adopted on the application of early intervention powers.
- While legal triggers and power for early intervention in problem banks are adequate, the powers in relevant legislation overlap substantially.
- Actions are needed to support the use of bank resolution powers.
- Weaknesses exist in the bank liquidation and insolvency framework:
- Lack of clarity regarding the legal regime applicable to bank winding-up and insolvency.
- Lack of clarity regarding the creditor hierarchy in liquidation.
- Impediments to implementation of the resolution tools are being identified and need to be addressed.
- Preparations need to be made for using the bridge institution resolution tool.
Policy recommendations and operational priorities
- Finalize and implement recovery planning requirements for banks.
- Adopt written policies and procedures governing the application of early intervention powers.
- Clarify and reconcile overlapping powers in relevant legislation to reduce legal uncertainty for early intervention.
- Strengthen the legal and operational framework to support the use of bank resolution powers.
- Address weaknesses and legal uncertainty in the bank liquidation and insolvency framework, including clarifying creditor hierarchy in liquidation.
- Identify and remove impediments to implementation of specific resolution tools.
- Prepare operationally and legally to deploy the bridge institution resolution tool.
Content in this bundle
- 1mltea2019005