Malta: Financial Sector Assessment Program-Technical Note-Risk Analysis

November 21, 2019

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Format: Chicago

Malta: Financial Sector Assessment Program-Technical Note-Risk Analysis, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Summary

This technical note presents Malta’s risk analysis related aspects of financial system. A comprehensive set of stress tests and interconnectedness analyses were conducted to assess the resilience of Malta’s financial system and shed light on potential vulnerabilities, complementing the euro area Financial Sector Assessment Program. Key metrics suggest that the banking sector is in good health, but challenges exist. Banks are well-capitalized, liquidity is ample, and profitability has been healthy. The solvency stress tests indicate that the banking sector remains resilient, with vulnerabilities limited to a few small banks. The banking sector appears resilient to liquidity pressures, but some small banks are vulnerable to more severe events. The interconnectedness analysis suggests that contagion risk through interlinkages from within the Maltese financial sector is currently higher and more wide-spread than contagion risk through cross-border interbank exposures. Monitoring and conducting periodic analysis of cross-border linkages, and further enhancing the existing inter-sectoral linkages analysis, is expected to provide an early warning before contagion risks accumulate.

Subject: Banking, Capital adequacy requirements, Commercial banks, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Liquidity stress testing, Solvency stress testing, Stress testing

Keywords: Balance sheet, Capital adequacy requirements, Cash flow, Commercial banks, Core bank, CR, Euro area bank, Global, Hurdle rate, Interest rate, ISCR, Liquidity stress testing, Maltese bank, Market share, Market value, Modified duration, Resolution plan, Sample bank, Solvency stress testing, Stress testing, U.S. dollar

Publication Details

Pages:

99
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/350
Stock No:

1MLTEA2019009
ISBN:

9781513520971
ISSN:

1934-7685

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