## Malta: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management

_IMF Staff Country Reports, November 21, 2019_

## Source details

**Canonical URL:** [Malta: Financial Sector Assessment Program-Technical Note-Bank Resolution and Crisis Management](https://www.imf.org/en/publications/cr/issues/2019/11/21/malta-financial-sector-assessment-program-technical-note-bank-resolution-and-crisis-48828)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/11/21/malta-financial-sector-assessment-program-technical-note-bank-resolution-and-crisis-48828/index.md)
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## Bibliographic details
- Published: November 21, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513520803.002

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### 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.

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## Content in this bundle

- **1mltea2019005**
  - [1mltea2019005 (Markdown version)](/-/media/files/publications/cr/2019/1mltea2019005.pdf.md){rel="alternate" type="text/markdown"}
  - [1mltea2019005 (PDF)](/-/media/files/publications/cr/2019/1mltea2019005.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/11/21/malta-financial-sector-assessment-program-technical-note-bank-resolution-and-crisis-48828_