Malta Development Bank

Malta to Have its First Development Bank

Malta is expected to have its first Development Bank after the government’s proposals have been given the green light by the European Commission. The proposals will be presented and voted upon in the Maltese Parliament where it is expected to be formally approved and implemented. The country will thus have another important tool in achieving its desired economic and social targets.

The Malta Development Bank will contribute to economic growth by funding sectors and projects that are not catered for by commercial banks. The Bank will be able to grant loans for specific national or regional projects to private or public bodies or may operate in conjunction with other financial institutions. This will result in the strengthening of the local financial base and a diversification of financing possibilities for local entrepreneurs and other economic operators. The Development Bank will also be particularly interesting for SMEs due to the difficulties that these face when trying to access funds. The bank will serve as the ideal platform to facilitate small businesses’ access to available funding as well as other projects related to strengthening the Maltese economy.

It will be within the bank’s remit to provide attractive wholesale financing and risk sharing facilities. The proposals include the possibility for the bank to be able to raise money by issuing bonds in order to finance projects. This would eventually attract wealth funds who are not interested in investing in projects to buy such bonds. This will be a powerful tool to bring to realisation more economically feasible projects.

The government-owned bank will have an authorised share capital of €200 million. This will allow it to eventually leverage this to around €1 billion in loans. The initial issued and paid-up share capital is expected to be around €30 million, with further allotments being made to accommodate the bank’s increasing needs.