On 26 August 2016, the European Commission approved Malta’s plans to establish the Malta Development Bank on the basis that its structure, financing and proposed activities are not in breach of the Treaties.

The Bank is specifically meant to provide favourable financing to SMEs and large infrastructure projects where the enterprise or project is in, or for, the benefit of Malta. The financing will be given, principally, by way of loans, capital subscription and guarantees, but only where such financing is not available in the market. The Bank will also act as a ‘wholesale intermediary’ to facilitate access to finance available in the private market. In its press release, the Commission states that this will not distort competition in the internal market.

The Government’s plans (as approved by the Commission) include a capital injection of at least €200m, a state guarantee up to 100% of its liabilities and also substantial fiscal exemptions.

A pre-legislative Bill establishing the Bank has been presented in Malta on 24 June 2016. It can be found here.

The Bill will presumably need to adjust to any conditions laid down by the Commission and this will be subject to parliamentary debate on 10 October 2016, where the second reading of that bill will take place.

The non-confidential version of the decision of the Commission will be published later.