                          BANKING ġ CAP. 371.        1
CHAPTER 371
BANKING ACT
To regulate the business of banking.
15th November, 1994
 ACT XV of 1994 as amended by Acts XXIV and XXV of 1995, VI of
2001, XVII of 2002, and IV and IX of 2003.
Short title.
Interpretation.
Amended by:
XXIV. 1995.362;
XXV. 1995.434;
XVII. 2002.157;
IX. 2003.76.
2. ( 1 ) In this Act, unless the context otherwise requires -
"bank" or "credit institution" means any person carrying on the
business of banking, and unless otherwise stated, shall include an
electronic money institution;
"banking directive" means a directive issued by the competent
authority to regulate credit institutions, to the exclusion of
electronic money institutions;
"body corporate" means a body of persons having a legal
personality distinct from that of its members;
"branch" means premises of a credit institution, other than its
head office, from which the business of banking is undertaken;
"business of banking" means the business of a person who as set
out in subarticle (2) accepts deposits of money from the public
withdrawable or repayable on demand or after a fixed period or
after notice or who borrows or raises money from the public
(including the borrowing or raising of money by the issue of
debentures or debenture stock or other instruments creating or
acknowledging indebtedness), in either case for the purpose of
employing such money in whole or in part by lending to others or
otherwise investing for the account and at the risk of the person
accepting such money;
Cap. 204.
"Central Bank" means the Central Bank of Malta as defined by
the Central Bank of Malta Act;
"close links" refers to a situation in which two or more persons
are linked:
( a ) by participation, through direct ownership or by way
of control of twenty per centum or more of the voting
rights or capital of a body corporate; or
Cap. 386.
( b ) by control, through the relationship between a parent
undertaking and a subsidiary undertaking as defined in
article 2(2) of the Companies Act; or
( c ) permanently to one and the same person through a
control relationship;
Cap. 168.
Cap. 386.
"company" means a limited liability company constituted in
Malta in accordance with the Commercial Partnerships Ordinance *
or the Companies Act, or any law which may from time to time be
  2      CAP. 371. ħ                BANKING
in force, or a company registered or incorporated outside Malta
under the laws of any country provided that such company, if not
constituted in Malta, would qualify to be so registered or
incorporated under the laws of Malta;
"competent authority" means the body referred to in  article 3 ( 2 ) ;
"connected persons" means persons defined as such in a large
exposures directive;
"control" is the power to determine in any manner the financial
and operating policies of a body corporate, the power to appoint or
remove the majority of the members of the board of directors or
equivalent governing body and the power to cast the majority of
votes at meetings of the board of directors or equivalent governing
body;
"controller" is a person who, alone or together with others,
exercises control in relation to a body corporate;
"court" means the Civil Court, First Hall;
"credit facility" means the lending of a sum of money by way of
an advance, overdraft or loan or any other line of credit including
discounting of bills of exchange and promissory notes, guarantees,
indemnities, acceptances and bills of exchange endorsed  pour aval ;
"deposit" means a sum of money paid-in on terms under which it
will be repaid, with or without interest or a premium and either on
demand or at a time or in circumstances agreed by or on behalf of
the person making the payment and the person receiving it; 
"director" includes an individual occupying the position of
director of a company, by whatever name he may be called,
empowered to carry out substantially the same functions in relation
to the direction of the company as those carried out by a director
and in respect of a company registered or incorporated outside
Malta includes a member of a local board or agent or representative
of that company;
"electronic money" means the monetary value as represented by
a claim on the issuer issuing such money which is:
(i) stored on an electronic device; and
(ii) issued on receipt of funds of an amount not less
in value than the monetary value issued; and
(iii) accepted as means of payment by undertakings
other than the issuer;
"electronic money institution" means any person, other than a
credit institution, which issues means of payment in the form of
electronic money;
"electronic money institutions directive" means a directive
issued by the competent authority to regulate electronic money
institutions;
"equity share" means a nominal share in a company when the
*Repealed by Act XXV of 1995 (Chapter 386).
                          BANKING ġ CAP. 371.        3
shareholding entitles the shareholder to a right to vote, to profits
available to shareholders for distribution and to assets available for
distribution on a winding up of the company, and "equity
shareholding" shall be construed accordingly;
Cap. 330.
"Financial Services Tribunal" or "the Tribunal" means the
Financial Services Tribunal established under the Malta Financial
Services Authority Act;
Cap.  386.
"holding company" has the same meaning as is assigned to the
term "parent company" in the Companies Act;
"large exposures directive" means a directive as may be issued
by the competent authority to regulate large exposures;
"licence", in relation to the business of banking, means a licence
granted under this Act;
"manager" means a person who is placed in charge of the
business or part of the business of a company or otherwise who has
a substantial supervisory role with the power to make policy and
executive decisions on behalf of the company;
"Minister" means the Minister responsible for finance;
Cap. 373.
"money laundering" has the same meaning ascribed to it by the
Prevention of Money Laundering Act;
"officer", in relation to a company, includes a director, partner,
manager or company secretary or any person effectively acting in
such capacity whether formally appointed or not;
"qualifying shareholding" means a direct or indirect equity
shareholding of at least 10 per cent of the equity shares of a
company; provided that where the rights held as to the percentage
of votes, to profits available for distribution and to rights to assets
available for distribution on a winding up in respect of such equity
shares are not identical, the highest percentage figure shall be
deemed to be the percentage of equity shares held, and "qualifying
shareholder" shall be construed accordingly;
Cap. 386.
"representative office" means, in relation to a body corporate,
unincorporated body or association formed in accordance with or
existing under the laws of a foreign country, premises in Malta
from which the business of banking is promoted or assisted in any
way, and in relation to a body corporate, unincorporated body or
association formed in accordance with and existing under the laws
of Malta, premises outside Malta from which the business of
banking is promoted or assisted in any way;
"significant shareholding" means a direct or indirect equity
shareholding of at least 5 per cent but not more than 10 per cent of
the equity shares of a company; provided that where the rights held
as to the percentage of votes, to profits available for distribution
and to rights to assets available for distribution of a winding up in
respect of such equity shares are not identical, the highest
percentage figure shall be deemed to be the percentage of equity
shares held, and "significant shareholder" shall be construed
accordingly;
  4      CAP. 371. ħ                BANKING
Cap. 386.
"subsidiary" has the same meaning as is assigned to the term
"subsidiary undertaking" by the Companies Act.
( 2 ) A person shall be deemed to be accepting deposits of
money if, whether as principal or as agent, he accepts from the
public deposits of money as a regular feature of his business, or if,
whether as principal or as agent, he advertises or solicits for such
deposits, without regard to the terms and conditions under which
such deposits are solicited or received and without regard to
whether certificates or other instruments are issued in respect of
any such deposits:
Provided that the acceptance of money against any issue of
debentures or debenture stock or other instruments creating or
acknowledging indebtedness offered to the public in accordance
with any law in force in Malta shall not of itself be deemed to
constitute acceptance of deposits of money for the purposes of this
Act:
Provided further that the receipt of funds by electronic
money institutions for the purpose of issuing electronic money
shall not constitute the acceptance of deposits or other repayable
funds if the funds received are immediately exchanged for
electronic money.
( 3 ) Save as otherwise expressly provided in this Act, the
provisions of this Act shall apply to electronic money institutions.
(4) The business activities of a credit institution to the
exclusion of an electronic money institution, may, besides the
business of banking, include any or all of the additional activities
listed in the Schedule as may be determined by the competent
authority.
(5) The business activities of an electronic money institution
shall be restricted to the issuing of electronic money:
Provided that subject to the granting of a licence for the
purpose by the competent authority, such activities may also be
extended to:
(i) the provision of closely related financial and
non-financial services such as the administering
of electronic money by the performance of
operational and other ancillary functions related
to its issuance, and the issuing and administering
of other means of payment but excluding the
granting of any form of credit; and
(ii) the storing of data on the electronic device on
behalf of other persons or public institutions.
Powers and duties 
of the Minister.
Amended by:
XVII. 2002.158.
3. ( 1 ) The Minister shall by order in the Gazette nominate a
body to be the competent authority for the purposes of this Act to
carry out the functions of the competent authority under this Act.
Such body shall be nominated for such period as the Minister may
determine and the Minister shall have the power at any time to
prolong, renew or terminate such nomination by order in the
Gazette.
                          BANKING ġ CAP. 371.        5
(2) The Minister may make regulations as may be required for
carrying into effect any of the provisions of this Act and may
amend or revoke such regulations.
( 3 ) ( a ) The Minister may, after consultation with the
competent authority and the Central Bank, if he deems
it expedient in the public interest so to do, by order
published in the Gazette declare any day or days to be
a bank holiday or holidays.
( b ) On any day declared to be a bank holiday under this
article, whether such day is also a public holiday or
not, no bank shall do any business with the public
except to the extent allowed by the order.
Powers and duties 
of the competent 
authority.
Amended by:
XVII. 2002.159.
4. ( 1 ) It shall be the duty of the competent authority to carry
out the functions prescribed by this Act and to ensure that credit
institutions carrying on business in Malta comply with this Act,
regulations and directives issued under this Act and with the
conditions of their licences. In pursuance of that duty the
competent authority shall at all times afford such co-operation to
the Central Bank as the Central Bank may require in the discharge
of its duties.
( 2 ) The competent authority may make banking directives and
electronic money institutions directives as may be required for
carrying into effect any of the provisions of this Act. The
competent authority may amend or revoke such directives, and may
in electronic money institutions directives provide that any
provision contained in any banking directive as may be specified
shall also apply to electronic money institutions.
( 3 ) Banking directives and electronic money institutions
directives and any amendment or revocation thereof shall be
officially communicated to credit institutions and the competent
authority shall make copies thereof available to the public.
( 4 ) Banking directives and electronic money institutions
directives imposing an obligation or requirement on the public shall
be made by regulations in accordance with article 3 ( 2 ) .
Licences for 
banking activities.
Amended by:
XVII. 2002.160.
5. ( 1 ) No business of banking or of issuing electronic money
shall be transacted in or from Malta except by a company which is
in possession of a licence granted under this Act by the competent
authority.
( 2 ) In the event of reasonable doubt as to whether the business
of banking or of accepting deposits or of issuing electronic money
is or is not being transacted in or from Malta by any person, the
matter shall be conclusively determined by the competent
authority.
( 3 ) The granting of a licence shall be subject to an annual fee
as the competent authority may determine from time to time.
(4) The competent authority may waive the application of any
or all of the provisions of this Act and of any electronic money
institutions directives to electronic money institutions in cases
  6      CAP. 371. ħ                BANKING
where -
( a ) the total business activities of the institution
concerning the issue of electronic money generate a
total amount of financial liabilities related to
outstanding electronic money that does not exceed two
million five hundred thousand Maltese liri; or
( b ) the electronic money issued by the institution is
accepted as a means of payment only by any
subsidiaries of the institution which perform
operational or other ancillary functions related to
electronic money issued or distributed by the
institution, any parent company of the institution or
any other subsidiaries of that parent company; or
( c ) electronic money issued by the institution is accepted
as payment only by a limited number of undertakings,
which can be clearly distinguished by:
(i) their location in the same premises or other
limited local area; or
(ii) their close financial or business relationship
with the issuing institution, such as a common
marketing or distribution scheme:
Provided that the underlying contractual
arrangements shall provide that the electronic
storage device at the disposal of holders for the
purpose of making payments is subject to a
maximum storage amount of not more than sixty
Maltese liri.
(5) Electronic money institutions to which the application of
any or all of the provisions of this Act and of any electronic money
institutions directives has been waived shall report periodically, as
the competent authority shall determine, on their activities
including the total amount of financial liabilities related to
electronic money.
(6) The Minister may, after consulting the competent authority,
establish or recognise other forms of authorisation and notification
procedures, subject to such conditions, additions, adaptations, and
modifications and exemptions as may be prescribed; and different
provisions may be made for different cases or classes of cases,
under such terms and conditions as may be prescribed, and account
shall be taken of Malta’s international commitments.
Application for a 
licence.
Amended by:
XVII. 2002.161.
6. ( 1 ) Any company desirous of commencing the business of
banking or of issuing electronic money in Malta shall, before
commencing any such business, apply in writing to the competent
authority for a licence under this Act.
( 2 ) All applications for a licence shall be in such form and
accompanied by such information, and shall conform with such
requirements as may be prescribed from time to time by banking
directive and, or, electronic money institutions directive and an
application may only be withdrawn by written notice to the
                          BANKING ġ CAP. 371.        7
competent authority at a time before it has been granted or refused.
( 3 ) The competent authority shall have the power to require
any person to provide such information as it shall deem necessary
for the purposes of determining an application for a licence or for
the purposes of determining whether to restrict or revoke a licence.
Issuing of a 
licence.
Amended by:
XVII. 2002.162;
IV. 2003.178.
7. ( 1 ) No company shall be granted a licence unless -
( a ) its own funds, whether in Maltese liri or in another
currency acceptable to the competent authority,
amount to not less than the value of two million
Maltese liri or, in the case of an electronic money
institution, not less than the value of five hundred
thousand Maltese liri:
Provided that, without prejudice and subject to
the provisions of article 16A, the competent authority
may by provision contained in a banking directive,
increase the amounts laid down in this paragraph, and
such amounts may be designated in such other
currency as may be specified in the directive;
( b ) there are at least two individuals who will effectively
direct the business of the credit institution in Malta;
( c ) all qualifying shareholders, controllers and all persons
who will effectively direct the business of the credit
institution are suitable persons to ensure its prudent
management;
( d ) the competent authority is satisfied that, where there
are close links between that company and another
person or persons, such links do not through any law,
regulation, administrative provision or in any other
manner prevent it from exercising effective
supervision of that company under the provisions of
this Act or any banking directive:
Provided that in respect of subarticle (1)( a ), ( b ) and ( c ), if
the applicant is a credit institution authorised in another country, it
has its head office in the same country where it is registered and, or
licensed:
Provided further that in respect of subarticle (1)( d ), the
company shall, after being licensed under this Act, inform the
competent authority forthwith of any change in circumstances
concerning the application of the said subarticle (1)( d ) and shall
further provide the competent authority with information necessary
to monitor compliance with the conditions referred to in the said
subarticle (1)( d ) on a continuous basis.
( 2 ) The provisions of subarticle  ( 1 )( a )  shall not apply to credit
institutions which were in possession of a banking licence on the
commencement of this Act and whose own funds do not attain the
levels prescribed:
Provided that - 
( a ) the own funds of that credit institution may not
  8      CAP. 371. ħ                BANKING
subsequently fall below the level held at that date
unless such reduction is temporary and approved by
the competent authority;
( b ) if control of that credit institution is acquired by a
person other than the person who controlled it on the
commencement of this Act, its own funds must attain
the level prescribed in subarticle  ( 1 )( a )  within such
period of the takeover as the competent authority may
determine.
( 3 ) The competent authority shall determine each application
for a licence within six months of receipt of the application or, if
the application does not comply with article 6 ( 2 )  or additional
information is required, within six months of compliance with the
said subarticle or the furnishing of the information as the case may
be, whichever be the later. In any event an application shall be
determined within twelve months of its receipt.
( 4 ) The competent authority shall determine an application by
doing any of the following:
( a ) granting a licence without conditions;
( b ) granting a licence subject to such conditions as it may
deem appropriate;
( c ) refusing to grant a licence:
and if it refuses an application it shall inform the applicant, in
writing, of the reasons for the refusal.
( 5 ) Where the competent authority for any reason fails to
determine an application for a licence within the time prescribed
under subarticle  ( 3 ) , such fact shall be deemed to constitute a
refusal to grant a licence.
(6) A credit institution licensed under this Act shall provide the
competent authority with particulars of any changes in the
information provided under this Act as soon as such credit
institution becomes aware of such change.
(7) When there is a merger of two or more credit institutions
following the consent of the competent authority, the own funds of
the credit institution resulting from the merger shall not be less
than the total own funds of the merged credit institutions at the
time of the merger.
Right of 
redemption.
Added by:
XVII. 2002.163.
Amended by:
IX. 2003.77.
7A. (1) A holder of electronic money may, during the period
of its validity, require the issuer to redeem any outstanding amount
at par value in coins and bank notes or by transfer to an account
free of charges other than those strictly necessary to carry out that
operation.
(2) The issuer shall state to the holder the conditions of
redemption in the contract between the issuer and the holder, and
may further establish a minimum threshold for redemption;
provided that the threshold shall not exceed five Maltese liri.
                          BANKING ġ CAP. 371.        9
Representative 
offices of non-
Maltese banks.
Amended by:
XVII. 2002.164.
8. ( 1 ) A company incorporated outside Malta which carries
on the business of banking shall not establish a representative
office in Malta unless it has given not less than two months’ notice
to the competent authority that it proposes to establish such an
office. Such notice shall -
( a ) specify the name it is proposed to use in relation to the
activities of the representative office and the address
of such office;
( b ) be accompanied by a certified copy of the
authorisation of the company to conduct the business
of banking in a country other than Malta.
( 2 ) A company mentioned in subarticle  ( 1 )  having a
representative office in Malta shall likewise notify the competent
authority -
( a ) at least two months in advance of any proposed change
in name of the representative office;
( b ) of any change in its licence to conduct the business of
banking in a country other than Malta, no more than
two months after such change.
( 3 ) The competent authority may, at any time, serve on a
representative office in Malta a notice objecting to the name or the
proposed name of such office.
( 4 ) The competent authority shall not give a notice pursuant to
subarticle  ( 3 )  unless it considers that the name or proposed name is
misleading to the public or otherwise undesirable, and upon receipt
of such notice, the representative office shall not use the name to
which the competent authority has objected in relation to activities
conducted in Malta.
( 5 ) The competent authority may, by notice in writing, require
any company having a representative office in Malta or which has
given notice pursuant to subarticle  ( 1 )  to provide the competent
authority with such information or documents as the competent
authority may reasonably require, and the said company shall
comply with such notice in the period as is reasonably specified by
the notice.
( 6 ) A representative office in Malta shall supply the competent
authority with a copy of any document which it is required to
provide to the Registrar of Companies no later than the time by
which such document must be provided to the said Registrar.
( 7 ) The competent authority may by banking directive provide
that the provisions of articles 20 to 24 shall apply to representative
offices in Malta in the same manner as they apply to credit
institutions.
( 8 ) The competent authority may by banking directive impose
on companies which have established or which propose to establish
representative offices in Malta such requirements as the competent
authority considers appropriate in connection with those offices
and the activities conducted from them and may impose on such
companies such annual fee as may be determined from time to time.
  10      CAP. 371. ħ                BANKING
( 9 ) The competent authority may, within the two months
referred to in subarticle  ( 1 ) , order a company referred to in the said
subarticle  ( 1 )  not to establish a representative office in Malta and at
any time thereafter order the closure of any representative office so
established.
Restriction and 
revocation of a 
licence.
Amended by:
XVII. 2002.165.
9. ( 1 ) A licence shall automatically cease to have any effect if
the holder -
( a ) renounces the licence; or
( b ) does not commence business pursuant to the licence
within twelve months of its issue or within such other
period of time as may be specified in the licence; or
( c ) is declared bankrupt or goes into liquidation or makes
a composition with its creditors or is otherwise
dissolved; or
( d ) has ceased to operate as a result of a merger with
another credit institution; or
( e ) is a branch of a credit institution incorporated outside
Malta and the competent authorities in the country of
incorporation withdraw the authorisation to the credit
institution.
( 2 ) The competent authority may impose restrictions on a
licence or may revoke a licence in any of the following
circumstances:
( a ) if any document or information accompanying an
application for a licence or any information given in
connection therewith is false in any material particular
or if the holder of a licence conceals from, or fails to
notify to the competent authority any document or
information or change therein which it was its duty to
reveal or notify under this Act; or
( b ) if the holder ceases to carry on the business of banking
in Malta for more than six months; or
( c ) if the holder fails to comply with any of the provisions
of this Act or with the conditions under which the
licence is granted; or
( d ) if the holder no longer possesses sufficient own funds;
or
( e ) if the holder is likely to become unable to meet its
obligations or can no longer be relied upon to fulfil its
obligations towards depositors and creditors; or
( f ) if the holder has insufficient assets to cover its
liabilities; or
( g ) if the holder has suspended payment or is about to
suspend payment; or
( h ) if the competent authority considers that, by reason of
the manner in which the credit institution is
conducting or proposes to conduct its affairs, or for
                          BANKING ġ CAP. 371.        11
any other reason, the interests of the depositors of the
credit institution are threatened. 
( 3 ) Restrictions imposed by the competent authority pursuant
to subarticle  ( 2 )  shall be such restrictions as the competent
authority shall consider appropriate for the proper compliance by
the credit institution with the provisions of this Act and the
conditions, if any, of its licence and for the protection of depositors
and may include  ( without prejudice to the generality hereof ) -
( a ) the removal of any officer of the credit institution or
the replacement of any officer by such person as the
competent authority may designate;
( b ) the requirement for any person who directly or
indirectly possesses a qualifying shareholding in the
credit institution to divest himself of all or part of that
holding;
( c ) the requirement for the credit institution to take or
refrain from any action;
( d ) the requirement that the credit institution be prohibited
from undertaking any transaction or transactions or
any class of business or be permitted to undertake any
transaction or transactions or any class of business
only upon such terms as the competent authority may
prescribe.
( 4 ) The competent authority shall have the power to vary or
remove any restrictions imposed under this article.
( 5 ) Where the competent authority intends to restrict or revoke
a licence or to vary any restriction, it shall serve written notice of
its intention on the credit institution; such notice shall specify the
grounds upon which the competent authority intends to take action
and shall specify a period in which the credit institution shall be
entitled to make representations to the competent authority as to
why such action should not be taken. Unless the competent
authority decides that the matter is urgent, it shall not impose or
vary any restriction or revoke a licence before the expiry of such
period.
( 6 ) A licence granted to a branch of a credit institution
incorporated outside Malta may only be revoked after consultation
with the competent authorities of the country of incorporation,
unless the competent authority decides that the matter is urgent or
that there are circumstances which make such prior consultation
inappropriate.
( 7 ) Upon the restriction or revocation of a licence of a credit
institution incorporated in Malta, the competent authority shall
inform the competent authorities of the country of any foreign
states in which the credit institution or its subsidiaries are carrying
on the business of banking.
(8) Where the competent authority is satisfied that the
circumstances so warrant, it may at any time make public any
action it has taken under this article.
  12      CAP. 371. ħ                BANKING
Appeals.
Amended by:
VI. 2001.24.
Substituted by:
XVII. 2002.166.
10. Any person who is aggrieved by a decision of the
competent authority:
( a ) to refuse an application for a licence;
( b ) to impose any condition on the grant of a licence;
( c ) to impose or vary any restriction;
( d ) to revoke a licence;
( e ) to issue a notice under article 8(3);
( f ) to close a representative office;
( g ) to impose an administrative penalty under the
provisions of article 35A;
( h ) to issue any notice or make any order under article 13;
( i ) to make any order under article 14; or
( j ) by failure of the competent authority to determine an
application for a licence under article 7(5),
Cap. 330.
may appeal against the decision to the Financial Services Tribunal
within such period and under such conditions as established under
the Malta Financial Services Authority Act.
Opening of 
branches.
Amended by:
XVII. 2002.167.
11. ( 1 ) A credit institution shall inform the competent
authority in writing before opening a new branch, agency or office
in Malta.
( 2 ) Unless with the written consent of the competent authority,
no credit institution incorporated in Malta may open a new branch,
agency or office or set up or acquire any subsidiary in any place
outside Malta.
Use of the word 
"bank".
Amended by:
XVII. 2002.168.
12. ( 1 ) Subject to subarticles  ( 2 )  and  ( 3 ) , save with the written
permission of the competent authority, no person other than a credit
institution, to the exclusion of electronic money institution, with a
current licence may use the word "bank" or any of its derivatives or
other words as may indicate or purport to indicate the carrying on
of the business of banking in any language in the description or title
under which such person is carrying on business, or make any such
use on any letter paper, in any notice or advertisement, or in any
other similar manner.
( 2 ) A credit institution incorporated outside Malta may use the
name used in its country of incorporation save that, where there is a
risk that the use of such a name may be misleading, such credit
institution shall add such explanatory particulars to its name as the
competent authority shall direct.
( 3 ) Every credit institution, other than an electronic money
institution, shall use as part of its description or title the word
"bank" or one or more of its derivatives.
Participation in a 
credit institution.
Amended by:
XVII. 2002.169.
13. ( 1 ) Notwithstanding anything contained in any other law,
the consent of the competent authority shall be required before any
person may lawfully -
( a ) acquire a significant shareholding or a qualifying
                          BANKING ġ CAP. 371.        13
shareholding in a credit institution;
( b ) increase an existing holding which is not a significant
shareholding or a qualifying shareholding so as to
cause it to become a significant shareholding or a
qualifying shareholding in a credit institution;
( c ) increase a significant shareholding in a credit
institution so as to cause it to become a qualifying
shareholding;
( d ) increase a qualifying shareholding so as to cause it to
equal or exceed, twenty per centum or thirty-three per
centum or fifty per centum or to cause the credit
institution to become that person’s subsidiary;
( e ) reduce a qualifying shareholding so as to cause it to
fall below fifty per centum or thirty-three per centum
or twenty per centum or to cause the credit institution
to cease to be that person’s subsidiary;
( f ) reduce a qualifying shareholding or a significant
shareholding so as to cause it to cease to be a
qualifying shareholding or significant shareholding;
( g ) divest himself of a qualifying shareholding or a
significant shareholding.
( 2 ) If, as a result of an acquisition of shares in a credit
institution, the credit institution in which a person proposes to
acquire the shareholding would become a subsidiary or be subject
to the control of the person acquiring those shares, and such person
is a credit institution authorised in another country or is a natural or
legal person controlling a credit institution authorised in another
country, the competent authority shall, prior to granting consent or
otherwise under the provisions of subarticle (1), consult with the
relevant competent authorities of the country concerned.
Cap. 345.
( 3 ) Subarticle  ( 1 )  shall apply whether or not any of the relevant
shares are shares listed a stock exchange licensed under the
Financial Markets Act.
( 4 ) It shall be the duty of a credit institution and of the
directors thereof to notify the competent authority forthwith upon
becoming aware that any person intends to take any of the actions
set out in subarticle  ( 1 ) .
( 5 ) Notwithstanding anything contained in any other law, the
consent of the competent authority shall be required before any
credit institution may lawfully -
( a ) sell or dispose of its business or any significant part
thereof;
( b ) merge with any other company, whether a credit
institution or otherwise;
( c ) undergo any re-construction;
( d ) increase its nominal or issued share capital or effect
any material change in voting rights.
( 6 ) It shall be the duty of all directors and qualifying
  14      CAP. 371. ħ                BANKING
shareholders of a credit institution to notify the competent
authority forthwith upon becoming aware that the credit institution
intends to take any of the actions set out in subarticle  ( 5 ) .
( 7 ) Any person intending to take any of the actions set out in
subarticle  ( 1 )  and any credit institution intending to take any of the
actions set out in subarticle  ( 5 )  shall notify the competent authority
in writing and the competent authority may issue a banking
directive regulating the form in which such notification shall take
place and the information required to be furnished to the competent
authority with such notification.
( 8 ) Within three months of receipt of such notification or
receipt of such information as the competent authority may
lawfully require, whichever be the later, the competent authority
shall, in view of the need to ensure sound and prudent management
of the credit institution concerned, issue a notice -
( a ) granting unconditional consent to the taking of the
action; or
( b ) granting consent to the taking of the action subject to
such conditions as the competent authority may deem
appropriate; or
( c ) refusing consent to the taking of the action:
Provided that where the competent authority fails for any
reason to issue such a notice within the prescribed period, this fact
shall be construed as if a consent had been issued in terms of
paragraph ( a ).
( 9 ) If any person or any bank takes or intends to take any action
set out in subarticles  ( 1 )  and  ( 5 )  without obtaining the consent of
the competent authority, or, alternatively, if after having obtained
such consent it subsequently appears to the competent authority
that any action taken under subarticles (1) and (5) is operating, or is
likely to operate, to the detriment of the prudent and sound
management of the credit institution, then, without prejudice to any
other penalty which may be imposed under this Act, the competent
authority shall have the power to make an order -
( a ) restraining the person or credit institution from taking
or continuing the action;
( b ) declaring the action to be void and of no effect;
( c ) requiring the person or credit institution to take such
steps as may be necessary to restore the position
existing immediately before the action was taken;
( d ) restraining the person or credit institution from
exercising any rights which the action would, if
lawful, have conferred upon them, including the right
to receive any payment or to exercise any voting rights
attaching to the shares acquired;
( e ) restraining the person or credit institution from taking
any similar action or any other action within the
categories set out in subarticles  ( 1 )  and  ( 5 ) .
                          BANKING ġ CAP. 371.        15
Control of a credit 
institution.
Amended by:
XVII. 2002.170.
14. ( 1 ) Any person who is a controller or director of a credit
institution shall be a suitable person to exercise such control.
( 2 ) A credit institution shall forthwith notify to the competent
authority -
( a ) full particulars of all persons who are controllers or
directors of credit institution;
( b ) full particulars of any person who is proposed to
become a controller or director of the credit
institution;
( c ) full particulars of any person who is proposed to cease
to be a controller or director of the credit institution.
( 3 ) A credit institution shall furnish the competent authority
with any further information it may require concerning any existing
or proposed controller or director.
( 4 ) If the competent authority is of the opinion that any person
who is or is proposed to become a controller or director of a credit
institution is not a suitable person to be a controller or director, the
competent authority may make an order requiring such a person to
cease to be a controller or restraining such a person from becoming
a controller or director.
Prohibited 
transactions.
Substituted by:
XVII. 2002.171.
Amended by:
IV. 2003.179.
15. (1) A credit institution, to the exclusion of an electronic
money institution shall not - 
( a ) grant any credit facility against the security of its own
shares or against any other securities issued by the
credit institution itself or against any shares or any
other securities of another body corporate in which the
credit institution has control;
( b ) grant or permit to be outstanding credit facilities or
extend other banking services, under tems and
conditions more favourable than the credit institution
would have otherwise applied -
(i) to any one of its directors or their spouses
whether jointly or severally, as well as with third
parties:
Provided that, in any case where unsecured
credit facilities are granted, these shall not in the
aggregate exceed the sum of ten thousand
Maltese liri;
(ii) to any person in whom or in which the credit
institution or any one or more of its directors is
interested as a director, partner, manager, agent
or member or to any person of whom or of which
any one or more of the credit institution's
directors is a guarantor;
(iii) to any body of persons in which the credit
institution or any one or more of its directors
jointly or severally maintains control, not being
itself a credit institution or the parent
undertaking of the credit institution, a subsidiary
  16      CAP. 371. ħ                BANKING
of this parent undertaking or a subsidiary of the
credit institution;
and where the competent authority has reason to
believe that such favourable terms and conditions have
been applied, it shall have the power to require the
credit institution to rectify the position and if the credit
institution fails to take the necessary action to rectify
the position as required, the competent authority shall
take such measures as it deems appropriate until the
position is rectified;
( c ) grant to or permit to be outstanding in respect of any
officer other than a director, or any employee,
unsecured credit facilities which in the aggregate
exceed twelve months’ emolument of such officer or
employee:
Provided that the competent authority may by
banking directive extend the restrictions listed in
paragraphs ( a ), ( b ) and ( c ) or any of them to other
officers, employees or shareholders of credit
institutions or to other categories of persons in such
manner and to such extent as may be specified;
Cap. 376.
( d ) acquire or hold directly or indirectly any significant or
qualifying shareholding in any company which is not
another credit institution, or a financial institution
licensed in terms of the Financial Institutions Act, or
any other company carrying out an activity which is
supervised on a consolidated basis by the competent
authority, the original cost value of which exceeds
fifteen per centum of the credit institution’s own funds
or its consolidated own funds, as the case may be:
Provided that:
(i) the limit of fifteen per centum shall apply to any
one company or group of connected persons;
(ii) the total amount of such holdings shall not
exceed sixty per centum of the credit
institution’s own funds or of its consolidated
own funds, as the case may be;
(iii) where the limits established are exceeded due to
unavoidable circumstances, the competent
authority shall require the credit institution
concerned either to increase its own funds
accordingly or to take other equivalent measures
over a transition period, not exceeding twelve
months, as may be established by the competent
authority;
(iv) shares held temporarily during a financial
reconstruction or rescue operation or during the
normal course of underwriting or in a credit
institution's own name on behalf of others shall
not be considered as a significant shareholding
for the purposes of the limits established under
                          BANKING ġ CAP. 371.        17
this paragraph;
(v) the competent authority may not apply the limits
established under this paragraph where the total
excesses are deducted from the credit
institution’s own funds as established under
article 17, and where both limits are exceeded,
the greater of the excess amounts shall be
deducted from the own funds;
(vi) where the credit institution is a parent or
subsidiary undertaking, compliance with the
limits laid down in this paragraph shall be
monitored on a consolidated basis;
( e ) without the consent of the competent authority acquire
or hold shares in another company which is not a
credit institution, which exceeds five per centum of
that company's issued share capital or any other
subsequent acquisition which exceeds the per centum
amount approved by the competent authority;
( f ) purchase, acquire or otherwise hold any immovable
property or any right thereon except as may be
reasonably necessary for the purpose of conducting its
business or housing or providing amenities for its
staff:
Provided that this paragraph shall not prevent a
credit institution -
(i) from letting part of any building which is used
for the purpose of conducting its business; or
(ii) from securing a debt on any immovable property
and, in the event of default in payment of such
debt, from acquiring or holding such property,
for realisation within twelve months, or any
longer period as may be determined by the
competent authority;
(iii) in other instances from acquiring immovable
property with the prior approval of the
competent authority the original cost of which
property shall not in the aggregate exceed five
per centum of the credit institution’s own funds.
(2) In subarticle (1)( b ) and ( c ) the expression "unsecured credit
facilities" shall mean credit facilities made without security or, in
respect of any credit facility made with security, any part thereof
which at any time exceeds the market value of the assets
constituting that security, or where the competent authority is
satisfied that there is no established market value, on the basis of a
valuation approved by the competent authority itself.
(3) An electronic money institution shall not:
( a ) have any holdings in any body of persons except
where such body of persons performs operational or
other ancillary functions related to electronic money
issued or distributed by the institution concerned;
  18      CAP. 371. ħ                BANKING
( b ) undertake any of the activities prohibited under
subarticle (1)( e ) and ( f );
( c ) exceed the limitations of investments which may be
specified in an electronic money institutions directive
issued under this Act.
Supervision on a 
consolidated basis.
Added by:
XVII. 2002.172.
15A. The competent authority shall monitor and supervise credit
institutions that are parent undertakings on a consolidated basis and
shall issue a banking directive as it considers appropriate to this
effect.
Large exposures. 16. The competent authority shall issue a banking directive as
it shall consider appropriate for the regulation of large exposures.
Own funds.
Added by:
XVII. 2002.173.
16A. (1) A credit institution shall at all times maintain a level
of own funds not less than the amount established in its licence or
as may be required by the competent authority from time to time.
(2) Where the amount of own funds of a credit institution falls
below the amount established under subarticle (1), the competent
authority shall require that credit institution to take the necessary
measures to restore the level of own funds within such period as the
competent authority may determine:
Provided that if the level of own funds of a credit institution
is not restored within the determined period, the competent
authority may, in addition to the power to impose an administrative
penalty, exercise any of the powers granted to it under the
provisions of article 9(2).
(3) The competent authority shall issue a banking directive as it
shall consider appropriate for the regulation of own funds.
Capital adequacy.
Amended by:
XVII. 2002.174.
17. ( 1 ) A credit institution, to the exclusion of an electronic
money institution, shall - 
( a ) maintain a capital adequacy ratio to risk-weighted
assets as defined in and calculated according to the
provisions of a banking directive;
( b ) notify the ratio to the competent authority at such
times and in such manner as shall be prescribed by a
banking directive;
( c ) notify the competent authority forthwith upon the ratio
falling below the level required by paragraph  ( a )
whereupon the competent authority shall require the
credit institution, to the exclusion of an electronic
money institution, to take necessary measures to
restore the ratio to the required level within such
period as the competent authority may determine.
Cap. 215. ( 2 ) Reserve funds created under article 9 of the Banking Act,
1970, *  are abolished. Such funds are to be allocated to such other
internal reserves forming part of own funds as each credit
institution, to the exclusion of an electronic money institution, may
deem appropriate.
*Repealed by this Act.
                          BANKING ġ CAP. 371.        19
( 3 ) Every credit institution, to the exclusion of an electronic
money institution, shall maintain adequate provisions for bad and
doubtful debts.
Bad and doubtful 
debts.
Added by:
XVII. 2002.175.
17A.  The competent authority shall issue a banking directive as
it shall consider appropriate for the regulation of provisioning for
bad and doubtful debts.
Liquidity.
Amended by:
XVII. 2002.176.
18. The competent authority shall issue a banking directive
specifying what shall constitute the specified liquid assets and the
deposit liabilities of a credit institution and laying down the
minimum holding of specified assets as a proportion of deposit
liabilities which a credit institution must hold. 
Information to be 
submitted to the 
competent 
authority and the 
Central Bank.
Amended by:
XVII. 2002.177.
19. ( 1 ) A credit institution shall submit to the competent
authority - 
( a ) periodic statements showing its assets and liabilities
and profit and loss position on an individual and,
where appropriate, on a consolidated basis including
analysis thereof;
( b ) such information as is required by the competent
authority for statistical purposes;
( c ) such information as the competent authority may
require to satisfy itself that the credit institution is
complying with the provisions of this Act;
( d ) such separate statements relating to its offices and
branches outside Malta in such form and at such times
as the competent authority may require in the
discharge of its duties.
( 2 ) A credit institution shall submit to the Central Bank such
information as the Central Bank may require in the discharge of its
duties and the Central Bank may enquire into and ask for
clarification of any information so submitted.
( 3 ) The provisions of this article shall also apply to all
branches, agencies or offices in Malta of a credit institution which
is not incorporated in Malta.
( 4 ) All statements required under subarticle  ( 1 )  shall be
submitted in such form and at such periods as shall be prescribed
by banking directive.
( 5 ) All statements and other information furnished by any
credit institution under subarticles (1) and (2) shall be regarded as
secret and confidential except as between that credit institution and
the competent authority or the Central Bank as the case may be
save that the competent authority shall furnish such information
under this article as may be required by the Minister or the Central
Bank and shall inform the Minister and the Central Bank if at any
time in its opinion there is concern regarding the state of affairs of
that credit institution.
  20      CAP. 371. ħ                BANKING
Supervision of 
credit institutions.
Amended by:
XVII. 2002.178.
20. ( 1 ) Every credit institution shall submit to the competent
authority any information which it may reasonably require in the
exercise of its duties under this Act, and the competent authority
may enquire into and ask for clarification of any information so
submitted.
( 2 ) Any request for information or for clarification thereof
under this article shall be by notice in writing and shall require the
recipient to provide the information at such time or times or at such
intervals or in respect of such period or periods as may be specified
by the notice.
( 3 ) Further, the competent authority may -
( a ) by notice in writing served on a credit institution,
require the credit institution to provide a report by an
accountant or other person with relevant professional
skill on, or on any aspect of, any matter about which
the competent authority has required or could require
the credit institution to provide information under
subarticle  ( 1 ) ;
( b ) by notice in writing served on a credit institution,
require it to produce within such time and at such
place as may be specified in that notice, such
document or documents of such description as may be
so specified in the notice;
( c ) authorise an officer, servant or agent of the competent
authority, on producing evidence of his authority, to
require any credit institution to provide him forthwith
with such information, or to produce to him forthwith
such documents, as he may specify, being such
information or documents as the competent authority
may reasonably require for the performance of its
functions under this Act.
( 4 ) The accountant or other person appointed by a credit
institution to make any report required under subarticle  ( 3 )( a )  shall
be a person nominated or approved by the competent authority; and
the competent authority may require the report to be in such form
as is specified in the notice.
( 5 ) Where, by virtue of subarticle  ( 3 ) , any person has power to
require the production of any documents from a credit institution,
that person shall have the like power to require the production of
those documents from any person who appears to be in possession
of them.
( 6 ) The power under this article to require a credit institution or
any other person to produce any documents includes power -
( a ) if the documents are produced, to take copies of them
or extracts from them and to require that credit
institution or person, or any other person who is a
present or past officer of, or is or was at any time
employed by or acting as an employee of, the credit
institution in question, to provide an explanation of
any of them; and
                          BANKING ġ CAP. 371.        21
( b ) if the documents are not produced, to require the
person who was required to produce them to state, to
the best of his knowledge and belief, where they are.
( 7 ) If it appears to the competent authority to be desirable in
the interests of the depositors or potential depositors of a credit
institution to do so, it may also exercise the powers conferred by
subarticles  ( 1 )  and  ( 3 )  in relation to any person who is or has at any
relevant time been -
( a ) a holding company, subsidiary or a company which is
a connected person of that credit institution;
( b ) a subsidiary or a person which is a company connected
to a holding company of that credit institution;
( c ) a holding company of a subsidiary of that credit
institution; or
( d ) a controller of that credit institution.
( 8 ) The competent authority may by notice in writing served on
any person who is or is to be an officer of a credit institution
require him to furnish, within such time as may be specified in the
notice, such information or documents as the competent authority
may reasonably require for determining whether he is a suitable
person to hold the particular position which he holds or is to hold.
( 9 ) The competent authority may exercise the powers conferred
by subarticles  ( 1 )  and  ( 3 )  in relation to any person who has a
significant shareholding or qualifying shareholding in a credit
institution if it considers that the exercise of those powers is
desirable in the interests of the depositors or potential depositors of
that credit institution.
( 10 ) A statement made by a person in compliance with a
requirement imposed by virtue of this article may be used in
evidence against him.
( 11 ) The competent authority shall have the power to recover
from a credit institution reported on under subarticle  ( 3 )  the costs
and expenses incurred in relation to such report.
Right of entry to 
obtain information 
and documents.
21. ( 1 ) Any officer, employee or agent of the competent
authority may, on producing, if required, evidence of his authority -
( a ) enter any premises occupied by a person on whom a
notice has been served under article 20 above or article
22 below for the purpose of obtaining there the
information or documents required by that notice;
( b ) enter any premises occupied by any person on whom a
notice could be served under article 20 above or article
22 below for the purpose of obtaining there such
information or documents as are specified in the
authority, being information or documents that could
have been required by such a notice; but the competent
authority shall not authorise any person to act under
this paragraph unless it has reasonable cause to believe
that if such a notice were served it would not be
  22      CAP. 371. ħ                BANKING
complied with or that any documents to which it would
relate would be removed, tampered with or destroyed:
Provided that where an entry as is mentioned in this
subarticle involves premises that are occupied for the purposes of
habitation, such entry shall be carried out in the presence of an
officer of the Police of a rank not below that of inspector and shall
moreover not take place between nine in the evening and five in the
morning.
( 2 ) No person shall intentionally obstruct a person exercising
rights conferred by this article.
Investigations.
Amended by:
XVII. 2002.179.
22. ( 1 ) If it appears to the competent authority desirable to do
so in the interests of the depositors or potential depositors of a
credit institution, it may appoint one or more competent persons to
investigate and report on -
( a ) the nature, conduct or state of the credit institution’s
business or any particular aspect of it, or
( b ) the ownership or control of the credit institution,
and the competent authority shall give written notice of any such
appointment to the credit institution concerned.
( 2 ) If a person appointed under subarticle  ( 1 )  thinks it
necessary for the purposes of his investigation, he may also
investigate the business of any person who is or has at any relevant
time been - 
( a ) a holding company, subsidiary or a company which is
a connected person of the credit institution under
investigation;
( b ) a subsidiary or a company which is a connected person
of a holding company of that credit institution;
( c ) a holding company of a subsidiary of that credit
institution; or
( d ) a controller of that credit institution.
( 3 ) The competent authority may exercise the powers conferred
by subarticle  ( 1 )  in relation to any person who has a significant
shareholding or qualifying shareholding in a credit institution if it
considers that the exercise of those powers is desirable in the
interests of the depositors or potential depositors of that credit
institution.
( 4 ) Where a person appointed under subarticle  ( 1 )  decides to
investigate the business of any person by virtue of subarticle  ( 2 )  or
subarticle  ( 3 )  he shall inform that person by notice in writing.
( 5 ) It shall be the duty of every person who is or was an officer,
employee, agent, banker or auditor of a body which is under
investigation under this Act, or any person appointed to make a
report in respect of that body under this Act and anyone who has a
significant shareholding in, qualifying shareholding in, or is a
controller of that body -
( a ) to produce to the persons appointed under subarticle
                          BANKING ġ CAP. 371.        23
( 1 ) , within such time and at such place as they may
require, all documents relating to the body concerned
which are in his custody or power;
( b ) to attend before the persons so appointed at such time
and place as they may require; and
( c ) otherwise to give those persons all assistance in
connection with the investigation which he is
reasonably able to give, 
and those persons may take copies of or extracts from any
documents produced to them under paragraph  ( a )  above.
( 6 ) A person exercising powers by virtue of an appointment
under this article shall, if so required, produce evidence of his
authority.
( 7 ) No person shall -
( a ) without lawful excuse fail to produce any documents
which it is his duty to produce under subarticle  ( 5 ) ;
( b ) without lawful excuse fail to attend before the persons
appointed under subarticle  ( 1 )  when required to do so;
or
( c ) without lawful excuse fail to answer any question
which is put to him by persons so appointed with
respect to any credit institution which is under
investigation or a body which is being investigated by
virtue of subarticle  ( 2 )  or  ( 3 ) .
( 8 ) A statement made by a person in compliance with a
requirement imposed by virtue of this article may be used in
evidence against him.
( 9 ) The competent authority shall have the power to recover
from a credit institution reported on under subarticle  ( 1 )  the costs
and expenses incurred in relation to such report.
( 10 ) For the purposes of this article, reference to a credit
institution shall include reference to persons appearing to be
carrying out the business of banking.
Suspected 
offences.
23. ( 1 ) Where the competent authority has reasonable grounds
for suspecting that a person is guilty of committing any offence
under this Act, it may by notice in writing require that person or
any other person -
( a ) to provide at such place as may be specified in the
notice and either forthwith or at such time as may be
so specified, such information as it may reasonably
require for the purpose of investigating the suspected
offence;
( b ) to produce, at such place as may be specified in the
notice and either forthwith or at such time as may be
so specified, such documents, or documents of such
description as may be specified which it may
reasonably require for that purpose; 
  24      CAP. 371. ħ                BANKING
( c ) to attend at such place and time as may be specified in
the notice, and answer questions relevant for
determining whether such an offence has occurred.
( 2 ) The competent authority or their duly authorised officer,
employee or agent may take copies of or extracts from any
documents produced under this article.
( 3 ) Any officer, employee or agent of the competent authority
may, between five o'clock in the morning and nine o'clock at night,
on producing if required evidence of his authority, enter any
premises occupied by a person on whom a notice has been served
under subarticle  ( 1 )  for the purpose of obtaining there the
information or documents required by the notice, putting the
questions referred to in paragraph  ( c )   of that subarticle or
exercising the powers conferred by subarticle  ( 2 ) .
( 4 ) No person shall without lawful excuse fail to comply with a
requirement imposed on him under this article or intentionally
obstruct a person in the exercise of the rights conferred by
subarticle  ( 3 ) .
( 5 ) A statement made by a person in compliance with a
requirement imposed by virtue of this article may be used in
evidence against him.
Obstruction. 24. No person who knows or suspects that an investigation is
being or is likely to be carried out -
( a ) under article 20, article 22 or article 23 ; or
( b ) into the suspected commission of any offence under
this Act,
may falsify, conceal, destroy or otherwise dispose of, or cause or
permit the falsification, concealment, destruction or disposal of,
documents which he knows or suspects are or would be relevant to
such an investigation unless he proves that he had no intention of
concealing facts disclosed by the documents from persons carrying
out such an investigation.
Co-operation and 
sharing of 
information.
Amended by:
XVII. 2002.180;
IV. 2003.180.
25. ( 1 ) On the basis of international agreements, or upon
reciprocity agreements, the competent authority may share its
supervisory duties with other foreign competent authorities in the
case of a credit institution or branch operating in Malta which is
fully or partly owned by a foreign person or in the case of a credit
institution fully or partly owned by Maltese residents which is
operating abroad.
(2) The competent authority may further, on the basis of
international agreements, or upon reciprocity agreements, disclose
information to other foreign competent authorities.
(3) The competent authority may disclose information under
the provisions of subarticle (2) only to the extent that the foreign
authorities receiving the information restrict its use for supervisory
and regulatory purposes or for such other purposes as may
specifically be agreed upon with the competent authority.
(4) The competent authority may further, on the basis of
                          BANKING ġ CAP. 371.        25
international agreements, or upon reciprocity agreements, authorise
other foreign competent authorities to carry out themselves, or
through the intermediation of competent persons they appoint, on-
site inspections for supervisory and regulatory purposes in
branches or subsidiaries of credit institutions having their head
office in the country of the competent authority making the
inspection.
(5) The competent authority shall further, upon a request in
writing, disclose to the Central Bank any information in the
possession of or accessible to the competent authority which is
required for the discharge of the duties of the Central Bank under
the law.
( 6 ) A person appointed under article 20 or article 22  shall be
given access to any accounts, returns, or other information with
regard to any credit institution which are in the possession of the
competent authority.
( 7 ) There shall be meetings held between a credit institution,
its appointed auditors and the competent authority on a trilateral or
bilateral basis as circumstances may warrant. These meetings may
be called by any of the parties concerned but shall always be
chaired by the competent authority.
Communication by 
auditors, etc., with 
the competent 
authority.
Amended by:
XVII. 2002.181.
26. ( 1 ) No duty to which -
( a ) an auditor of a credit institution; or
( b ) a person appointed to make a report under article
20 ( 3 )( a )  or article 22 ( 1 ) ,
may be subject, shall be regarded as contravened by reason of his
communicating in good faith to the competent authority, whether or
not in response to a request made by it, any information or opinion
on a matter to which this article applies and which is relevant to
any function of the competent authority under this Act.
( 2 ) In relation to an auditor of a credit institution this article
applies to any matter falling within article 31 ( 9 ) .
( 3 ) In relation to a person appointed to make a report under
article 20 ( 3 )( a ) , this article applies to any matter of which he
becomes aware in his capacity as the person making the report and
which -
( a ) relates to the business or affairs of the credit
institution in relation to which his report is made or
any associated body of that credit institution; or
( b ) if by virtue of article 20 ( 7 )  the report relates to an
associated body of a credit institution, to the business
or affairs of that body.
( 4 ) In relation to a person appointed to make a report under
article 22 ( 1 ) , this article applies to any matter of which he becomes
aware in his capacity as the person making the report and which -
( a ) relates to the business or affairs of the credit
institution in relation to which his report is made or
  26      CAP. 371. ħ                BANKING
any associated body of that credit institution, or
( b ) if, by virtue of article 22 ( 2 ) , the report relates to an
associated body of a credit institution, to the business
or affairs of that body.
( 5 ) In this article "associated body", in relation to an
institution, means any such body as is mentioned in article 20 ( 7 )   or
mentioned in article 22 ( 2 ) .
( 6 ) If it appears to the competent authority that any accountants
or class of accountants who are persons to whom subarticle  ( 1 )
above applies are not subject to satisfactory rules made or guidance
issued by a professional body specifying circumstances in which
matters are to be communicated to the competent authority as
mentioned in that subarticle, the competent authority may, after
consultation with the Central Bank and such bodies as appear to the
competent authority to represent the interests of accountants and
credit institutions, make regulations applying to those accountants
and specifying such circumstances, and it shall be the duty of an
accountant to whom the regulations apply to communicate a matter
to the competent authority in the circumstances specified by the
regulations.
Joint Banking 
Committee.
27. Repealed by Act XVII. 2002.182.
Credit institutions 
unable to meet 
obligations.
Amended by:
XVII. 2002.183.
28.   Notwithstanding any investigation provided for in this Act -
( a ) where a credit institution considers that it is likely to
become unable to meet its obligations or that it is
about to suspend payment, it shall forthwith inform the
competent authority and the Governor of the Central
Bank in writing;
( b ) where the competent authority becomes aware that a
credit institution is likely to become unable to meet its
obligations or that it is about to suspend payment, it
shall forthwith inform the Governor of the Central
Bank in writing;
( c ) where the Central Bank becomes aware that a credit
institution is likely to become unable to meet its
obligations or that it is about to suspend payment, it
shall forthwith inform the competent authority in
writing.
Depositor 
protection.
Added by:
XVII. 2002.184.
Amended by:
IV. 2003.181.
28A.  Without prejudice to the powers arising under article 3, the
Minister, acting on the advice of the competent authority, may
make regulations to establish schemes or other arrangements with
such distinct legal personality or otherwise as may be prescribed,
for the protection of depositors in cases where credit institutions
are unable to satisfy their obligations towards depositors and to
regulate the management and the financing of any such schemes or
arrangements for compensation and the contributions and levies to
be paid thereto, to set out minimum and maximum levels of
compensation, to exclude certain deposits from the application of
such schemes or arrangements, and to make provision for any other
                          BANKING ġ CAP. 371.        27
aspect related to depositor protection schemes including rules on
advertising; and such schemes shall be exempt form the payment of
income tax as from the date of establishment of such schemes.
Power of 
competent 
authority to take 
control of credit 
institutions.
Amended by:
XVII. 2002.185.
29. ( 1 ) If, whether from any report made under article 20 or
article 22 or otherwise, it appears to the competent authority that
any of the circumstances indicated in article 9 ( 2 )  apply, the
competent authority, after consulting with the Central Bank, may,
without prejudice to the provisions of article 9(2) -
( a ) require the credit institution forthwith to take such
steps as the competent authority may consider
necessary to remedy or rectify the matter;
( b ) appoint a competent person to advise the credit
institution in the proper conduct of its business;
( c ) appoint a competent person to take charge of the assets
of the credit institution or any portion of them for the
purpose of safeguarding the interests of depositors;
( d ) appoint a competent person to assume control of the
business of the credit institution and either to carry on
that business or to carry out such other function or
functions in respect of such business, or part thereof,
as the competent authority may direct;
( e ) require the credit institution to wind up its business or
to wind up its business in Malta;
( f ) appoint a competent person to act as liquidator for the
purpose of winding up the affairs of the credit
institution;
( g ) fix the remuneration to be paid by the credit institution
to any competent person appointed under this
subarticle.
( 2 ) Where a competent person is appointed by the competent
authority:
( a ) under subarticle  ( 1 )( b ) , the credit institution shall act
in accordance with the advice given by such person
unless and until the competent authority otherwise
directs;
( b ) under  subarticle  ( 1 )( c ) , the credit institution shall
deliver to such person all the assets of which he is
placed in charge, and all the powers, functions and
duties of the credit institution in respect of those assets
whether exercisable by the company in general
meeting or by the board of directors or by any other
person, including the legal and judicial representation
of the credit institution, shall be exercisable by and
vest in him to the exclusion of the credit institution;
( c ) under subarticle  ( 1 )( d ) , the credit institution shall
submit its business to the control of such person and
shall provide him with such facilities as he may
require in order to carry on that business or to carry
out the functions assigned to him under that paragraph,
  28      CAP. 371. ħ                BANKING
and all the powers, functions and duties of the credit
institution, whether exercisable by the company in
general meeting or by the board of directors or by any
other person, including the legal and judicial
representation of the credit institution in all matters,
shall be exercisable by and vest in him to the exclusion
of any other person.
( 3 ) Where a person is appointed under subarticle  ( 1 )( c )  or   ( d )  -
( a ) any function, power or duty exercisable by any other
person, including the curator of a bankrupt or any
other person appointed by or under any other law, and
relating to any assets or business of which the person
appointed under either of the paragraphs aforesaid is
placed in charge or in control, shall, unless or until the
competent authority otherwise directs or an express
provision of law specifically provides otherwise, cease
to be so exercisable;
( b ) the person appointed under either of the paragraphs
aforesaid shall, in respect of such property,
partnerships, firms or other business as the competent
authority may specify and in which the credit
institution has an interest, whether directly or
indirectly, including any interest arising from
advances or loans made or credit facilities given or any
liability undertaken, have such powers, functions and
duties, including legal and judicial representation, as
the competent authority may direct, and any such
power, function or duty shall be exercisable by and
vest in such person to the exclusion of any other
person:
Provided that:
  ( i ) the competent authority shall have power to
direct that all or any of the powers, functions or
duties aforesaid should be exercisable by any
other person, and in any such case, with effect
from such date or dates as the competent
authority may specify and unless and until the
competent authority otherwise directs, the
powers, functions and duties to which the
direction of the competent authority applies
shall be exercisable by and vest in such other
person appointed for the purpose to the
exclusion of all others;
( ii ) where the competent authority is of the opinion
that the credit institution has ceased to have any
interest as aforesaid, it shall direct that any
powers, functions and duties exercisable under
this paragraph shall cease to be so exercisable,
but any such direction shall not affect anything
done or omitted to be done by virtue or by
reason of any of the aforesaid powers, functions
                          BANKING ġ CAP. 371.        29
or duties;
( c ) the person appointed under either of the paragraphs
aforesaid shall have the power to require any other
person to provide him with such facilities as he may
deem necessary to carry out any of the powers,
functions or duties under this article;
Cap. 13. 
( d ) the provision of law relating to bankruptcy and in
particular Part III of the Commercial Code shall cease
to apply to, and shall cease to operate in respect of any
property, partnership, firm or other business specified
by the competent authority under paragraph  ( b ) , unless
and until, or except to the extent that, the competent
authority otherwise directs; and in any such case the
person appointed as aforesaid shall, subject to any
directions of the competent authority given in the
interest of the creditors, act as if those provisions did
not exist and as if any declaration of bankruptcy had
not been made;
( e ) any person appointed by the competent authority under
any of the provisions of this article shall submit six-
monthly reports of his activities and annual accounts
of all transactions carried out by him in the
performance of his functions audited by an
independent auditor to the Minister who will place
such reports and accounts on the table of the House of
Representatives within fifteen days.
( 4 ) Where a person is appointed under subarticle  ( 1 )( g ) , such
person shall be the liquidator of the company for all purposes of
law to the exclusion of any other person.
( 5 ) The provisions of this article shall have effect
notwithstanding any other provision of any enactment, and
notwithstanding any deed, contract, instrument or other document
whatsoever.
( 6 ) The foregoing provisions of this article vesting exclusive
powers of representation in a person appointed by the competent
authority thereunder shall apply also to any act or proceedings
commenced or instituted before such representation vested as
aforesaid, and in respect of any such act or proceedings any other
person acting or purporting to act, or in respect of whom action is
taken, in that capacity shall cease to be a party to, and shall be
excluded from, any such act or proceedings.
( 7 ) No person shall in any way obstruct a person appointed
under subarticle  ( 1 )  in the performance of any of his functions,
powers or duties under this article.
( 8 ) In respect of a credit institution operating in Malta and
elsewhere the offices and branches in Malta of that credit
institution shall, if the competent authority so directs and to the
extent it so directs, be deemed to constitute a separate credit
institution.
( 9 ) Upon receipt of a report as is mentioned in subarticle  ( 1 ) ,
  30      CAP. 371. ħ                BANKING
the competent authority shall inform the Central Bank on whether it
intends to take any action pursuant to such report and of any action
it intends to take thereon.
Minister may make 
regulations.
Added by:
XVII. 2002.186.
29A.  The Minister may, after consulting the competent authority,
make regulations in respect of the winding-up or re-organisation of
credit institutions established in Malta and of branches of credit
institutions established outside Malta, and different provisions may
be made for different cases or classes of cases, and account shall be
taken of Malta’s international commitments in this regard. Such
regulations may provide for the implementation of detailed re-
organisation measures and procedures, including the following
matters: the publication and submission of information in such
language or languages and in such newspapers or other publications
as may be prescribed; the submission of information to creditors,
and the manner and procedure thereof; the notification to creditors
and the procedure for the submission of claims or representations;
measures for the protection of the rights of creditors and other third
parties, including netting arrangements; consultation between the
competent authority and any other regulatory, administrative or
judicial authorities in Malta and outside Malta with competence
over the winding-up or re-organisation of credit institutions or of
branches thereof; the publication of decisions relating to such
winding-up or re-organisation procedures; the establishment of
rules governing the applicability of the proper or applicable law
and other issues of conflict of laws.
Publication of 
audited financial 
statements.
Amended by:
XVII. 2002.187.
30. Every credit institution shall, not later than four months
from the closing of its financial year or at any other time as may be
exceptionally authorised by the competent authority -
( a ) forward to the competent authority and the Central
Bank, and
( b ) exhibit in a conspicuous position in each of its offices
and branches in Malta and keep so exhibited
throughout the year, 
a copy of its audited financial statements drawn up and published in
such manner as may be specified in accordance with a banking
directive.
Auditors.
Amended by: 
XXV.1995.434;
XVII. 2002.188.
31. ( 1 ) ( a ) Every credit institution shall each year appoint an
approved auditor or auditors whose duty shall be to
report on the financial statements of the credit
institution examined by them and on all financial
statements prepared by the credit institution.
Cap. 386.
( b ) For the purpose of this article an approved auditor
shall be a person who is qualified to be an auditor in
accordance with the Companies Act, and holds the
authorisation of the competent authority to act as
auditor of a credit institution.
( 2 ) If a credit institution fails to appoint an auditor under
subarticle  ( 1 )  or, at any time fails to fill any vacancy in the office of
an auditor, the competent authority shall have the power to appoint
                          BANKING ġ CAP. 371.        31
an auditor for that credit institution and shall fix the remuneration
to be paid by that credit institution to such auditor.
( 3 ) The auditors’ report shall include statements as to the
following matters -
( a ) whether they have obtained all the information and
explanations which to the best of their knowledge and
belief were necessary for the purpose of their audit;
( b ) whether in their opinion, proper books of account have
been kept by the credit institution, so far as appears
from their examination of those books,
( c ) whether the credit institution’s financial statements
dealt with by the report are in agreement with the
books of account;
( d ) whether, in their opinion, and to the best of their
knowledge and according to the explanations given to
them, the said financial statements give the
information required by any law which may from time
to time be in force in the manner so required and give a
true and fair view.
( 4 ) The report of the auditors shall be read together with the
report of the directors of the credit institution at the annual meeting
of shareholders.
( 5 ) Every auditor of a credit institution shall have the right to
demand such information or explanation as he deems necessary in
the performance of his duties from any officer or employee of the
credit institution.
( 6 ) A credit institution shall forthwith give written notice to the
competent authority -
( a ) on the appointment of its auditors;
( b ) if it proposes to give notice to its shareholders to -
( i ) replace its auditors at the expiration of their term
of office;
( ii ) remove its auditors before the expiration of their
term of office;
( c ) if the auditors cease to be auditors of the credit
institution for any reason other than those in paragraph
( b ) .
( 7 ) The competent authority may require a credit institution to
change its appointed auditors where, in the competent authority’s
opinion, such auditors are considered unfit for this appointment at
any time during their term of office.
( 8 ) An auditor shall immediately advise the competent
authority if -
( a ) he resigns;
( b ) he does not seek to be re-appointed; or
( c ) he decides to qualify the audit report.
  32      CAP. 371. ħ                BANKING
( 9 ) If, in his capacity as an auditor of a credit institution or due
to a direct request by the competent authority under article 20 or
under article 22, an auditor becomes aware of any matter which
relates to and may have a serious adverse effect upon the depositors
of that credit institution, of the branches in Malta of a credit
institution which is not incorporated in Malta, or of any connected
person which is a credit institution, he shall immediately inform the
competent authority through the credit institution’s management or,
if circumstances so warrant, directly to the competent authority.
( 10 ) Notwithstanding any of the provisions of the foregoing
subarticles, the competent authority may in the case of a credit
institution not incorporated in Malta grant exemption by way of
banking directive from any of the requirements of this article
provided that the same does not materially detract from the main
objects of this article.
Cap. 386.
( 11 ) In so far as the provisions of this article are inconsistent
with the provisions of the Companies Act, the provisions of this
article shall prevail and the provisions of the said Act shall, to the
extent of the inconsistency, not apply to credit institutions.
Disqualification of 
officers.
Amended by:
XVII. 2002.188.
32. ( 1 ) No person -
( a ) who has been adjudged bankrupt or has made a
composition with his creditors or has been an officer
of a credit institution which has had its licence
revoked under  article 9 ( 2 ) ; and who has not been
exempted in writing by the competent authority from
the provisions of this article; or
( b ) who is interdicted or incapacitated or who has been
involved in money laundering or found guilty of a
crime affecting public trust, theft, fraud, extortion or
of knowingly receiving property obtained by theft or
fraud,
shall act or continue to act as an officer of a credit institution.
Duties of officers.
Amended by:
XVII. 2002.188.
33. Every officer of a credit institution shall take all reasonable
steps -
( a ) to secure compliance by the credit institution with all
of the provisions of this Act and of its licence or any
banking directive or regulation issued under this Act,
and
( b ) to ensure that no incorrect information is provided
either wilfully or as the result of gross negligence.
Confidentiality.
Amended by:
XVII. 2002.189.
34. ( 1 ) Nothing in this Act shall authorise the Central Bank or
the competent authority to enquire or cause an enquiry to be made
in a credit institution into the affairs of any individual customer of
a credit institution except -
( a ) for the purpose of ensuring compliance with any of the
provisions of this or any other Act, or
( b ) where the customer’s exposure is large within the
terms of the large exposures directive and they believe
                          BANKING ġ CAP. 371.        33
that such an exposure can be a threat to that credit
institution or to the banking sector in general.
( 2 ) No person, including past and present officers or agents of a
bank, shall disclose any information relating to the affairs of a bank
or of a customer of a bank which he has acquired in the
performance of his duties or the exercise of his functions under this
Act except -
( a ) when authorised to do so under any of the provisions
of this Act;
( b ) for the purpose of the performance of his duties or the
exercise of his functions;
( c ) when lawfully required to do so by any court or under
a provision of any law.
Cap. 373.
( 3 ) When an officer of a credit institution has reason to believe
that a transaction or a proposed transaction could involve money
laundering, he shall act in accordance with regulations laid down
under the Prevention of Money Laundering Act, and any guidelines
provided by the competent authority. Compliance with the
provisions of this subarticle shall not constitute a breach of
confidentiality.
( 4 ) Officers of the competent authority and of the Central
Bank, including past and present officers, shall not disclose
information obtained from credit institutions in the course of
carrying out supervisory and other duties, which is governed by the
obligation of professional secrecy, except for the purpose of the
performance of their duties or the exercise of their functions, or
when lawfully required to do so by any court or under a provision
of any law.
(5) Notwithstanding the provisions of any other law, a credit
institution may, if circumstances so warrant, communicate any
information which is in its possession and which relates to the
affairs of a customer, to other members of the group of companies
of which that institution forms part.
Cap. 376.
(6) For the purposes of subarticle (5) of this article, the term
"group of companies" shall include any body corporate registered
or operating in Malta or in a foreign jurisdiction and forming part
of the group of companies and which is further licensed or
otherwise authorised under the laws of Malta or of that jurisdiction,
as the case may be, to carry out any activity equivalent to the
business of banking or of the issuing of electronic money or any of
the activities referred to in the Schedule to the Financial
Institutions Act.
Offences and 
penalties.
Amended by:
XVII. 2002.190.
35. ( 1 ) Any person who - 
( a ) makes a statement, promise or forecast which he
knows to be misleading, false or deceptive, or
dishonestly conceals any material facts; or
( b ) recklessly makes  ( dishonestly or otherwise )  a
statement, promise or forecast which is misleading,
false or deceptive, 
  34      CAP. 371. ħ                BANKING
is guilty of an offence if he makes the statement, promise or
forecast or conceals the facts for the purpose of inducing, or is
reckless as to whether it may induce, another person  ( whether or
not to the person to whom the statement, promise or forecast is
made or from whom the facts are concealed )  -
( i ) to make, or refrain from making, a deposit with
him or any other person; or
( ii ) to enter, or refrain from entering, into an
agreement for the purpose of making such a
deposit.
( 2 ) Subarticle  ( 1 )  does not apply unless -
( a ) the statement, promise or forecast is made in or from,
or the facts are concealed in or from, Malta, or
arrangements are made in or from Malta for the
statement, promise or forecast to be made or the facts
to be concealed;
( b ) the person on whom the inducement is intended to or
may have effect is in Malta; or
( c ) the deposit is or would be made, or the agreement is or
would be entered into, in Malta.
( 3 ) Any person who - 
( a ) contravenes or fails to comply with any of the
provisions of this Act;
( b ) contravenes or fails to comply with the provisions of
any banking directive, electronic money institutions
directive, regulation or licence condition;
( c ) fails to comply with any lawful order or requirement
of the competent authority or the Central Bank;
( d ) fails to comply with any lawful order or requirement
of the Financial Services Tribunal;
( e ) fails to comply with any lawful order or requirement
of any other person made under this Act;
( f ) without reasonable excuse alters, suppresses, conceals,
destroys or refuses to produce any document which he
is lawfully required to produce by any person under
this Act,
shall be guilty of an offence.
( 4 ) Any person who is knowingly a party to, or procures or aids
and abets the commission of any offence under subarticles  ( 1 )  and
( 3 ) , shall be guilty of an offence and shall be liable to the same
penalties as the principal offender.
( 5 ) The Minister shall issue regulations prescribing penalties
for offences against this Act, and such regulations may -
( a ) prescribe penalties which are enforceable by
prosecution in the courts of Malta;
( b ) prescribe different penalties for contraventions of
                          BANKING ġ CAP. 371.        35
different provisions of this Act;
( c ) prescribe penalties calculated in accordance with the
duration of the commission of the offence;
( d ) provide for an appeal to the Financial Services
Tribunal from any decision of the competent authority
to impose an administrative penalty.
( 6 ) The penalties prescribed by regulations issued under
subarticle  ( 5 )  -
( a ) in the case of imprisonment, shall not provide for a
sentence of imprisonment greater than two years;
( b ) in the case of a fine imposed after a prosecution in the
courts of Malta, shall not provide for a fine of less than
one hundred liri or greater than five hundred thousand
liri.
( 7 ) The Minister may by regulations provide for administrative
penalties which may be imposed by the competent authority
without recourse to a court hearing:
Provided that an administrative penalty may not impose a
financial penalty greater than fifty thousand liri.
(8) No proceedings for an offence against this Act or any
regulations made thereunder, other than proceedings imposing an
administrative penalty, shall be commenced without the sanction of
the Attorney General.
Administrative 
penalties.
Added by:
XVII. 2002.191.
35A. (1) Where the competent authority decides to impose an
administrative penalty, it shall notify the person on whom the
penalty is being imposed by means of a notice in writing.
(2) Where the person upon whom such notice is served:
( a ) fails to pay to the competent authority the amount of
the penalty within a period of thirty days of the service
of the notice, and fails to appeal from the decision of
the competent authority to the Financial Services
Tribunal; or
( b ) appeals to the Financial Service Tribunal and fails
within a period of fifteen days from the decision of
Tribunal to pay the administrative penalty as
confirmed or as reduced by that Tribunal; 
then, in every case, the amount of the administrative penalty, as
originally imposed or as reduced, as the case may be, shall be due
to the competent authority as a civil debt, and the provisions of
subarticle (3) shall apply.
Cap. 12.
(3) A notice as is referred to in subarticle (1), or the decision of
the Financial Services Tribunal, as the case may be, shall upon the
service by judicial Act of a copy thereof on the person indicated in
the notice, constitute an executive title for all effects and purposes
of Title VII of Part I of Book Second of the Code of Organization
and Civil Procedure.
  36      CAP. 371. ħ                BANKING
Application of Act 
to the Central 
Bank. 
36. The provisions of this Act shall not apply to the Central
Bank, save where and to the extent that the Central Bank is referred
to by name.
Saving. 
Cap. 215.
37. * ( 1 ) Every licence, appointment, order or other action
whatsoever under the Banking Act †  shall continue in force as if
such licence, appointment, order or other action were taken under
this Act.
Cap. 215.
Cap. 330.
( 2 ) The repeal of the Banking Act shall not apply to banking
offshore companies registered under the Malta International
Business Activities Act ‡ , until such time as the Minister may by
order in the Gazette establish.
Added by:
XVII. 2002.192.
SCHEDULE
(Article 2(4))
List of Additional Activities
1. Financial leasing;
2. Money transmission services;
3. Issuing and administering means of payment (credit cards,
travellers’ cheques and bankers’ drafts and similar instruments);
4. Guarantees and commitments;
5. Trading for own account or for account of customers in:
( a ) money market instruments (cheques, bills, certificates
of deposit, and similar instruments);
( b ) foreign exchange;
( c ) financial futures and options;
( d ) exchange and interest-rate instruments;
( e ) transferable securities.
6. Participation in securities issues and the provision of
services related to such issues;
7. Advice to undertakings on capital structure, industrial
strategy and related questions and advice as well as services
relating to mergers and the purchase of undertakings;
8. Money broking;
9. Portfolio management and advice;
10. Safekeeping and administration of securities;
11. Credit reference services;
12. Safe custody services.
*This article originally contained three subarticles. The original subarticle (1) has
been omitted under the Statute Law Revision Act, 1980.
†Repealed by this Act.
‡Title changed to "Malta Financial Services Centre" by Act XIII of 1994, and to
"Malta Financial Services Authority" by Act XVII of 2002.
