Malta Financial Services Authority (MFSA) Chief Officer of Supervision Christopher Buttigieg has called for banks, external audit and advisory firms to join the debate on effective strategies for the banking industry’s future.

Speaking during the opening of a conference for banks and professional advisors hosted by the MFSA on Wednesday, Dr Buttigieg stressed that regulators and the industry need to work together to achieve the best outcomes possible.

“The EU Single Rule Book for the regulation of financial services is today made up of over 680 documents, ranging from directives and regulations to guidelines, that amount to more than 15,000 pages and more than 23,000 articles,” he said.

Dr Buttigieg stressed that “Geopolitical and economic developments, climate change, and financial market shocks” all pose risks to the financial system that continue to be tackled by the “refinement and further development” of financial regulation.

“We need to work together to achieve a balance between increased resilience through regulation – and making sure Malta hosts a robust and thriving banking industry,” he concluded.

Vesselka Paneva, who works within the European Central Bank (ECB)’s Supervision unit and is responsible for the oversight of Malta’s smaller banks, also highlighted the impact of independent board members on challenging strategic decisions and providing checks and balances that are “crucial” to sound decision-making.

Ms Paneva was referring to a review carried out by the ECB in 2021 that analysed less significant institutions (LSIs), which found that across the 21 countries involved, “only 48 per cent of non-executive board members are formally independent”, with numerous banks having board members that have a very low level of independence.

This is compared to 59 per cent of non-executive board members in significant institutions that are formally independent, indicating a stark difference.

Deputy Governor of the Central Bank of Malta Oliver Bonello was another keynote speaker during the conference, who emphasised the importance of banks accounting for the potential introduction of macroprudential tools – financial policies that seek to ensure the stability of the financial system as a whole – to cater for “emerging structural or cyclical vulnerabilities”.

During the event’s discussion, it became clear that banks have been operating in a challenging environment over the last two years.

This environment, along with ever-increasing regulation, have put increased pressure on banks’ boards to form strategies that both serve the stakeholders well, while also making commercial sense.

At the same time, regulators are expecting banks to improve their digital services to control costs so they can continue meeting capital requirements, improve risk management and anti-money laundering systems, as well as invest in operational and cyber resilience.