The EU's capital requirements directives : their implementation and impact in Malta

Abstract

This study analyses the EU’s Capital Requirements Directive (CRD), its related Regulations (CRR), and their implementation and impact in Malta, with some comparison with Ireland. Since 2013, in the wake of these regulatory measures, Malta had to make substantial macro-prudential institutional amendments, with the Central Bank of Malta (CBM) and the Malta Financial Services Authority (MFSA) coming closer together, both in terms of a Memorandum of Understanding (MoU) and their participation in a Joint Financial Stability Board (JFSB). In comparison it has resulted that Irish macro-prudential supervision is more centralized than Malta’s, even though the CRD’s and CRR’s impact on Malta’s core domestic banks has been very positive from 2015 onwards. Amongst the main positive features which have resulted in Malta we found consistent profit growths, and reductions in Non-Performing Loans (NPLs).