josef bonnici : an alternative model for banking in malta – a case for setting up a cooperative bank in maltese economic realities address by professor josef bonnici, governor of the central bank of malta, at the seminar on “ cooperative banking ”, valletta 27 september 2012. * * * honourable ministers, distinguished guests, ladies and gentlemen. as the previous speakers have shown, cooperative banks, though not often in the news, in these times perhaps thankfully, have a considerable presence in most countries, particularly, but not only, in european countries. indeed, data for 2010 show that in europe cooperative banks hold a market share of over 20 % of deposits and a similar market share for loans. their presence is particularly marked in france, where the three cooperative banking groups ( credit agricole, bpce and credit mutuel ) account for some 50 % of the market share for loans and 60 % of that for deposits. there is also a significant presence in italy, where they enjoy a market share of 34 % of deposits and 30 % for loans ; in germany, where they have a market share of 19 % for deposits and 16 % for loans ; in the netherlands, with a market share of 43 % of deposits and 30 % for loans ; and in finland, with a market share of 34 % for deposits and 32 % for loans. they include, apart from the well - known french banks already mentioned, such respected names as rabobank in holland and the raiffeissen banks in germany. cooperative banks also have a significant presence in south korea, japan, canada, morocco, mexico and brazil. so the question immediately arises : how come that no such institution has ever been set up in malta? after all one would have thought that the idea of cooperation and solidarity, and the spirit of the seven basic principles of the international cooperative alliance ( ica ) would have a strong appeal in malta. these seven principles consist of : voluntary and open membership ; democratic member control ; member economic participation ; autonomy and independence ; education, training and information of members and employees ; cooperation with other cooperatives ; and, especially, concern for the community. moreover, we do have cooperatives in other spheres of activity here, and these have been around for some time. indeed, the start of the cooperative movement in malta dates back to the later years of the 19th century ( around 1884 ), and the first form of legislation regulating cooperatives here – the cooperative societies ordinance 1946 – came into effect on 12th december

net worth customers, and 66 sub - funds, with a total net asset value of lm1. 22 billion. the number of local collective investment schemes ( ciss ) stands at 14, with 52 sub - funds, and shareholders ’ funds total over lm0. 5 billion. the insurance sector has also been growing rapidly of late, with four new licences being issued during the first half of 2006. to date, there are 33 insurance principals registered in malta, 16 of them are foreign companies offering their services through insurance agents. passporting rights have been well availed of in this sector, too, and the total number of notifications for european insurance undertakings to carry on business in malta under the freedom to provide services directive now stands at 204. the other reflection i would like to share with you is inspired by an interview given recently by the ceo of mediterranean bank to a local economic magazine, in which malta was referred to as ‘ a secure eu jurisdiction ’. in this same context it was stated that ‘ malta ’ s stability is an important part of its appeal as a banking location ’. while such accolades are indeed welcome, they do not come entirely as a surprise. for when malta ’ s financial legislation was overhauled in 1994, and when eu legislation was later transposed in anticipation of eu membership, an intended by - product was indeed the incorporation of the highest international standards and best practices into maltese financial laws and regulations. this was accompanied by a strengthening of the institutional framework for the regulation and oversight of the financial system. in 2002 the malta financial services authority ( mfsa ) became the single regulator for financial services when it took over the responsibility for the banking sector from the central bank of malta ( cbm ). the bank then assumed responsibility for ensuring the stability of the entire financial system. a year later malta volunteered to undergo a financial sector assessment programme ( fsap ) by the imf and the world bank. after a thorough examination by a team of international experts, our financial system was certified as being healthy, well supervised in the context of a comprehensive legal framework, and strongly compliant with most of the relevant international standards and codes. we cannot, of course, afford to be complacent. a good reputation takes time and considerable effort to earn, but can easily be lost. it is the joint responsibility of the cbm and the mfsa, the credit institutions and the other financial service providers, and of all market participants, including the financial lawyers