Commission approves Malta Development Bank
The European Commission has cleared the creation of a development bank in Malta (MDB), financing infrastructure projects and small businesses.
In July 2016 Malta notified the commission of plans to support the creation of an MDB with a capital injection of €200m, allowing for tax exemptions and guarantees of about €55m.
Maltese Deputy Prime Minister Louis Grech (pictured) hailed the approval as a “fundamental step in extending Malta’s financial infrastructure”.
Grech added: “The country will now have a financial institution that specialises in development and which will not be guided solely by the profits of the shareholders.”
The MDB will provide subsidy to small and medium sized enterprises (SMEs) that face difficulties financing themselves from the market. It could also support infrastructure projects when financing is insufficient.
The commission has suggested that the MDB will help private investment avoid being crowded out by the state-supported development bank.
The commission has therefore concluded that the MDB’s scope of activity will not interfere with competition in the Single Market.
It could also participate in EU financial instruments, such as the Programme for the Competitiveness of Enterprises and SMEs (COSME), Horizon 2020 or the European Fund for Strategic Investments (EFSI), which aim to support strategic investments in key areas throughout the EU.
The extent of market failures may, however, develop. If the market for SME and infrastructure project financing do likewise, the commission will then reassess its decision, based on a Maltese report on the MDB’s operations, in 2019.
