Financial Institutions The MFSA is responsible for the supervision of entities authorised under the Financial Institutions Act (Cap. 376). The Authority applies a risk-based approach in order to effectively
supervise financial institutions
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Financial Institutions

The Malta Financial Services Authority is responsible for the supervision of entities authorised under the Financial Institutions Act (Cap. 376). These entities, referred to as ‘financial institutions’, fall in two broad categories:

i) Institutions undertaking payment services and/or the issuance of electronic money (more commonly known as ‘payment institutions’ or ‘electronic money institutions’, respectively);

ii) Financial Institutions undertaking other activities such as lending, financial leasing, the provision of guarantees and commitments, foreign exchange services and money brokering.

The Financial Institutions Act, Financial Institutions Rules and other pieces of subsidiary legislation transpose the provisions of the second Payment Services Directive and the second Electronic Money Directive, applicable to authorised payment and electronic money institutions.

The Authority applies a risk-based approach in order to effectively supervise financial institutions. This approach requires the Authority to assess both the system-wide and individual risk posed by each financial institution in order to coordinate its supervisory activities accordingly and allocate its resources to the financial institutions posing the greatest risks.

Those Institutions which are designated as posing the greatest risk are subject to enhanced ongoing supervision which involves:

i) on-site inspections to analyse in detail the different risks, internal control systems, business models or governance of financial institutions;

ii) off-site supervision to continuously monitor the activities of financial institutions through the information which such institutions are required to submit in terms of their legal obligations (such as periodic regulatory returns, financial statements and other documentation submitted).

Financial Institutions

This section provides a list of the main Acts and subsidiary legislation which lay down the framework of the regulatory and supervisory regime applicable to financial institutions. These provide the regulatory structure for the supervision of these entities and include, amongst others, the powers of the MFSA to grant, refuse, cancel and suspend licences issued to financial institutions and to impose administrative penalties on these entities in specific circumstances. The Financial Institutions Act (Chapter 376 of the Laws of Malta), which is the main legislation, also contains enabling clauses allowing the Minister responsible for the regulation of financial services to issue subsidiary legislation as well as the MFSA, as competent authority, to issue Rules to further supplement the provisions in the Act.

Other Applicable BRs

BR/01/2020 Application Procedures And Requirements For Authorisation Of Licences For Banking Activities Under The Banking Act 1994

 

  Explanatory Note

  Application Procedures and Requirements for Authorisation of Licences for Banking Activities under the Banking Act 1994

  Internet and Electronic Banking Questionnaire

  Application for Authority to carry out the Business of Banking in or from Malta

  Questionnaire for Qualifying Shareholders other than Individuals

  Personal Questionnaire

 

BR/02/2011 Large Exposures for Credit Institutions Authorised Under the Banking Act 1994

 

  Explanatory Note

 

BR/03/2012 Own Funds of Credit Institutions Authorised Under the Banking Act 1994

 

  Explanatory Note

 

BR/04/2013 Capital Requirements Of Credit Institutions Authorised Under the Banking Act 1994

 

  Explanatory Note

 

BR/05/2007 Liquidity Requirements of Credit Institutions Authorised Under the Banking Act 1994

 

  Liquidity Requirements of Credit Institutions authorised under the Banking Act 1994

  Annex 2 – Liquidity Maturity Ladder

  Annex 2 – Explanatory Notes

  Annex 3 & 4 – Liquidity Ratio – Deposit Liabilities

  Annex 5- Liquid-Asset Requirement

  Annex 5 – Explanatory Notes

  Annex 6 – Declaration Form to be used in filing Annexes 2 and 5 of the Rule

 

BR/06/2007 Statutory Financial Information To be Submitted By Credit Institutions Authorised Under the Banking Act 1994

 

  Statutory Financial Information to be submitted by Credit Institutions Authorised Under the Banking Act 1994

  Instructions to the Schedule Appendices 1 – 11

  Statutory Returns

 

BR/07/2014 Publication of Annual Report And Audited Financial Statements of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  Publication of Annual Report and Audited Report and Audited Financial Statements of Credit Institutions Authorised under the Banking Act 1994

  Appendix 1

  Appendix 2

  Appendix 3

 

BR/08/2012 Capital Adequacy Of Credit Institutions Authorised Under the Banking Act 1994

 

  Explanatory Note

 

BR/09/2016 Measures Addressing Credit Risk Arising From the Assessment Of the Quality of Asset Portfolios Of Credit Institutions Authorised Under the Banking Act 1994

 

  Measures Addressing Credit Risks Arising from the Assessment of the Quality of Asset Portfolios of Credit Institutions Authorised under the Banking Act 1994

  Annex 1

  Annex 2

 

BR/10/2013 Supervision On A Consolidated Basis of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note 

 

BR/11/2007 Extension Of The Applicability Of The ‘Arm’s Length’ Principle By Credit Institutions Authorised Under The Banking Act 1994

 

  Extension of the Applicability of the ‘Arm’s Length’ Principle by Credit Institutions authorised under the Banking Act 1994

 

BR/13/2009 Prudential Assessment Of Acquisitions And Increase Of Shareholdings In Credit Institutions Authorised Under The Banking Act 1994

 

  Prudential Assessment of Acquisitions and Increase of Shareholdings in Credit Institutions Authorised under the Banking Act 1994

 

BR/14/2020 Outsourcing By Credit Institutions Authorised Under The Banking Act 1994

 

  Outsourcing by Credit Institutions Authorised under the Banking Act 1994

 

BR/22/2020 Complaints-Handling Procedures for Credit Institutions Authorised under the Banking Act 1994

 

Complaints-Handling Procedures for Credit Institutions Authorised under the Banking Act 1994

Other BRs applicable up to 31 December 2013

BR/02/2011 Large Exposures Of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  Large Exposures of Credit Institutions

  Appendix 1 – Reporting Schedules

 

BR/03/2012 Own Funds Of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  Own Funds of Credit Institutions

  Appendix 1 – Reporting Schedule

  Appendix 2 – Definition of Components Constituting Own Funds

 

BR/04/2013 Capital Requirements Of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  Banking Rule 4 and Appendix 1

  Appendix 2 – Section I Credit Risk Standardised Approach

  Appendix 2 – Section II IRB Approach

  Appendix 2 – Section III CRM (Credit Risk Mitigation)

  Appendix 3 – Securitisation

  Appendix 4 – Operational Risk

  Appendix 5 – Returns

  Annex I – Definitions

  Annex II – Classification of Off-Balance Sheet items

  Annex III – Types of Derivatives

  Annex IV – Treatment of Interest and foreign exchange instruments

  Annex V – Transitional Provisions

 

BR/07/2013 Publication Of Annual Report And Audited Financial Statements Of Credit Institutions Authorised Under The Banking Act 1994.

 

  Explanatory Note

  Publication of Annual Report and Audited Financial Statements of Credit Institutions Authorised under the Banking Act 1994.

 

BR/08/2012 Capital Adequacy Of Credit Institutions Authorized Under The Banking Act 1994

 

  Explanatory Note

  Capital Adequacy of Credit Institutions Authorized Under the Banking Act 1994

  Appendix A – Calculation of Capital Requirements Ratio

  Appendix B – Definitions

  Appendix C – The Trading Book and Hedging Exposures

  Appendix D – Instruments which qualify for inclusion in the Trading Book

  Appendix E – Calculation of Consolidated Capital Requirements Ratio

  Appendix F – Business Activities subject to Capital Requirements

  Appendix G – Capital Adequacy Rule Summary Schedule

  Annex I – Calculating Capital Requirements for Foreign Exchange Risk

  Appendix I – A – Calculating the Net Open Position

  Appendix I – B – Calculation of the Capital Requirement for Foreign Exchange

  Appendix I – C(c-i) – Return of Long Currency Positions

  Appendix I – C(c-ii & iii) – Return of Long Currency Positions (Codes)

  Appendix I – C(c-iv) Return of Short Currency Positions

  Appendix I – C(c-v & vi) Return of Short Currency Positions (Codes)

  Appendix I – D – Simple Method for Options (Carve-out)

  Appendix I – E – Total Capital Requirements for Foreign Exchange Risk (Return)

  Annex II – Calculating Capital Requirements for Settlement and Counterparty Risk

  Appendix II – A – Recognised Clearing Houses and Exchanges

  Annex III – Calculating Capital Requirements for Position Risk

  Appendix III – A – Interest Rate Specific Risk (Return)

  Appendix III – B – Interest Rate General Risk Method 1 – Maturity Bands, Risk Weights (Return)

  Appendix III – C – Interest Rate General Risk Method 2 – Duration Bands, Risk Weights (Return)

  Appendix III – D – The Carve-Out Method for Options

  Appendix III – E – Relevant Credit Rating Agencies and Investment Grade Ratings

  Appendix III – F – Equity Position Risk (Return)

  Appendix III – G – Position Risk Summary (Return)

  Annex IV – Underwriting Risk

  Annex V – Calculating Capital Requirements for Commodities Risk

  Appendix V – A – Maturity Ladder Approach for Commodities Risk (Example)

  Annex VI – Calculating Capital Requirements for Large Exposures Risk

  Appendix VI – A – Calculation of Incremental Trading Book Capital Requirement (Example)

  Annex VII – Use of Internal Models to calculate Capital Requirements

 

BR/10/2013 Supervision On A Consolidated Basis Of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  Supervision on a Consolidated Basis of Credit Institutions authorised under the Banking Act 1994

 

BR/12/2013 The Supervisory Review Process Of Credit Institutions Authorised Under The Banking Act 1994

 

  Explanatory Note

  The Supervisory Review Process Of Credit Institutions Authorised Under The Banking Act 1994

  List of Appendices & Annexes

  Appendix 1 Internal Governance

  Appendix 2 ICAAP

  Annex 2A – ICAAP Report – Recommended Structure

  Annex 2B – Technical Criteria on Organisation & Treatment of Risks

  Annex 2C – List of Definitions

  Annex 2D – Principles on Stress Testing

  Annex 2E – Principles for Remuneration Policies

  Annex 2F – Principles for the Management of IRRBB

  Annex 2G – Principles for the Mgmt of Concentration Risk

  Annex 2H – Principles on Risk Management

  Annex 2I – Principles for the Management of Operational Risk in Market-Related Activities

  Appendix 3 SREP

  Annex 3A – SREP-ICAAP interaction process

  Annex 3B – Technical Criteria on SREP

  Annex 3C – Prudential Measures

  Appendix 4 Obligations of the Authority as Consolidating Supervisor

Superseded BRs

BR/14/2019 Outsourcing By Credit Institutions Authorised Under The Banking Act 1994

 

BR/14/2019 – Outsourcing by Credit Institutions Authorised under the Banking Act 1994

In this section you will find the Conduct Rules applicable to credit and financial institutions by the MFSA. These Rules supplement the requirements contained in the Main Legislation and in the Subsidiary Legislation which applies to credit and financial institutions. They address in more detail certain requirements such as disclosures, product oversight and governance, selling processes, management of conflicts of interests. Credit and financial institutions are legally bound to comply with these Rules.

 

Conduct of Business Rulebook

Final List of the most representative services linked to a payment account

European Union – Template – Fee information document

European Union – Template – Statement of fees

Equity Release Financial Products Rulebook

Equity Release Financial Products Regulations, 2019 – Application Forms

Equity Release Financial Products – Glossary

 Banking Supervision Circulars

 

In this section, you will find the Circulars issued by the Authority which are applicable to the conduct supervision of credit institutions. These Circulars are a means of keeping the industry updated mainly on regulatory matters. Circulars may be issued to provide updates and clarifications in relation to requirements emanating from banking – related regulatory requirements (for example the Payments Accounts Regulations); to inform the industry on proposed decisions taken by the MFSA and to inform the industry on any relevant documents published by the European Banking Authority (EBA).

 Banking Conduct Circulars

 

In this section you will find the Consultation Documents issued by the MFSA and which are of interest to credit institutions. These documents are issued to explain to the industry any new regulatory requirements which the Authority may be proposing to implement and the manner in which these will be implemented. During the consultation period, credit institutions will have the opportunity to provide their feedback which the Authority review. Following the consultation period, the Authority may issue the Feedback statement with a summary of the comments received in the course of the consultation period on that particular topic and the final position of the Authority with respect to the matters forming the subject of the consultation.

 Conduct Consultations and Feedback Statements