Capital adequacy and Maltese banking

Abstract

Capital adequacy (CA) analysis in Maltese banking requires a more conscious and holistic approach because of the science's own continuously evolving characteristics, and because the current local contemporary economic environment is a very dynamic one, inclusive of slow but inevitable deregulation of the financial services industry. This study relates international contemporary CA issues to a Maltese focus. Developments on the assets and liabilities sides of Maltese commercial banks' balance sheets, and in off-balance-sheet items, are analysed, and current indications are that the BIS and EC suggested minimum rum of 8 per cent will have been well achieved by early 1994. The study also considers present and envisaged local banking legislation insofar as concerns CA issues, as well as the recently received EC Commission's opinion (the 'avis’) on Mal ta' s membership application insofar as concerns the island's banking scenario. An attempt is here made to comment on CA developments and related economic factors to as up-to-date a point as possible.