Governance first, growth next: Inside the MDB

Governance that unlocks growth—via partner banks and InvestEU.

Alison Micallef, CEO of the Malta Development Bank, tells Lea Hogg how a balance sheet can punch above its weight—de-risking green investment, unlocking capital, and turning Vision 2050 from aspiration into bankable projects built on transparency, inclusion, and growth for Malta.

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When Alison Micallef took the helm of the Malta Development Bank, she seized an opportunity to shape the architecture of Malta’s economic future. With a career spanning three decades in global risk management, Micallef is now applying her expertise not to minimise exposure, but to maximise impact: steering the Bank toward projects that drive innovation, sustainability, and social inclusion.

“Our role is to bridge gaps where traditional lenders hesitate,” she says. “We’re not just financing today’s projects; we’re enabling Malta’s economy of tomorrow.”

“It’s a shift in mindset,” she tells me. 

“Commercial banks focus on maximising private profit. Development banks exist to drive socio-economic development and public welfare. That means we’re often willing to take on risks others won’t—because what we’re prioritising is long-term sustainable growth, not just short-term return.”

It is a big commitment for an institution barely seven years old, one that still has to prove its weight in an economy heavily reliant on sectors such as tourism, construction and online gaming. The MDB is small compared to its European peers. Still, Micallef argues its impact can be disproportionate if it positions itself as a lever to mobilise private capital into neglected areas such as green infrastructure, digitalisation, and inclusion.

From crisis manager to architect of growth

Micallef’s career demonstrates her extensive experience in financial risk, but her first months at the Malta Development Bank have been focused on a different challenge: enhancing the Bank’s visibility. Its most high-profile achievement came during the pandemic, when it was tasked with providing close to half a billion euros in guaranteed loans. For such a young institution, it was a significant test. 

“Crises have been a proving ground for the MDB,” she says. “We showed we could mobilise quickly, effectively, and with accountability. My task now is to build on that foundation and guide the Bank into its next phase of growth.” 

That next phase is now visible on the ground. MDB has launched a Sustainability Guarantee—Malta’s first thematic InvestEU guarantee—delivered through partner banks so that SMEs can access support where they already bank. The instrument is live via BOV and HSBC, with a third lender in process, widening reach without reinventing the customer journey.  

Under the hood sits an uncapped portfolio guarantee covering 80% of each eligible loan—calibrated, the Bank says, to give partner banks meaningful capital relief and lending capacity, with the expectation that improvements are passed through to SMEs in the form of longer tenors, lower collateral and sharper pricing within state-aid limits. 

MDB’s COVID-era ex-post assessment also shapes today’s approach: governance embedded at the design stage, strict eligibility agreed with banks up front, and delivery through normal bank credit processes. MDB says the headline lesson is that speed and accountability can co-exist—provided the rules are clear from the start.

Reality check line: Uncapped structures typically deliver stronger SME benefits but lower headline “leverage multiples” than capped schemes; MDB says it is prioritising pass-through to businesses over optics.

Beyond GDP

Malta has enjoyed enviable GDP growth over the past decade, though often fuelled by industries that Brussels and environmentalists eye warily. Micallef knows the ground is shifting. “The focus is moving towards quality of life, inclusivity, sustainability, and innovation,” she says. “The MDB is placing itself at the centre of that shift.” That includes financing solar panels on factory rooftops, supporting SMEs to adopt energy-efficient systems, co-funding creative projects spanning architecture to audiovisual media, and tapping European instruments—such as InvestEU—for green mobility and digital productivity upgrades.

Her rhetoric is confident, but the underlying challenge is ever-present: Malta spends a fraction of the EU average on R&D and remains heavily dependent on traditional sectors. Can a bank with a modest balance sheet really tilt the playing field? Micallef frames the MDB’s role not as a lender of last resort but as a catalyst. “Every euro of our guarantee can unlock multiples of private capital. That is how small economies like Malta punch above their weight.”

To avoid brochure-speak, we discuss where that leverage should show up. MDB targets observable outcomes—more viable projects financed on better terms, a rising share of green and digital investments, and shorter median approval times through partner banks. The Bank says it will publish clear KPIs so progress can be tracked. 

Scrutiny as strength

In Brussels and beyond, Malta’s financial system has faced its share of scepticism. For Micallef, multiple layers of oversight—from national audit to European reporting—are less a hindrance than a badge of trust. “Oversight can make processes slower, yes,” she admits. “But it enhances credibility. It reassures stakeholders that the MDB is a trusted partner. Without that, we wouldn’t be able to attract resources to Malta.”

Critics counter that reporting burdens can still slow roll-outs. MDB’s response is practical rather than rhetorical: standardise templates, set state-aid and eligibility in advance with participating banks, and avoid duplicate data requests. If a loan meets the scheme criteria, it proceeds without extra approvals—the bank underwrites as usual; MDB’s risk-sharing shifts the economics. 

By the numbers (latest available, bank-reported)

• Cumulative support: c. €680m to end-2023 (June 2025)

• Delivery: MDB flagship schemes (SGS and GCLS) are intermediated by APS, BOV and HSBC. BOV and HSBC intermediate the sustainability sub-schemes.

• Guarantee design: uncapped portfolio cover at 80% per eligible loan

• COVID legacy: ex-post assessment cites claims below the worst-case scenario and strong accessibility; delivery through eight banks during the scheme

• Focus: rising share of sustainable/energy-efficiency/digital productivity projects under the sustainability schemes

Yet credibility alone isn’t enough if the Bank’s services remain invisible to the very businesses it aims to support. Even at home, many SMEs remain unaware of the services offered by the MDB. Micallef concedes the point. “Too many SMEs don’t know what support is available, or they’re put off by perceived complexity,” she says. Her answer is to partner with commercial banks—BOV, APS, HSBC—so that small firms can access MDB guarantees through familiar channels, with lower collateral requirements, better loan terms and longer repayment periods. She is careful to add that additionality matters: if a deal would go ahead on the same terms without MDB support, the Bank should not be involved.

It is a pragmatic fix, but hardly a glamorous one. The danger, critics argue, is that the MDB risks becoming a quiet back-office guarantor rather than the visionary development bank Micallef describes. She disagrees. “Access to finance should be a catalyst, not a barrier. If a project is viable, we want to ensure it gets support.”

From Vision 2050 to reality

Micallef’s horizon is Malta’s Vision 2050, a long-term plan for a sustainable, innovation-driven, and inclusive economy. MDB, she insists, is not a bystander but an enabler. “Our contribution is already visible—from renewable energy and green mobility to education and community infrastructure. We’re not just supporting projects of today—we’re preparing Malta for the economy of tomorrow.”

How the 80% guarantee works

• Problem: viable SME investment, but collateral gap and short tenor make pricing tight; the bank hesitates.

• MDB structure: an uncapped portfolio guarantee covers 80% of each eligible loan. This provides partner banks with capital relief, enabling longer maturities, lower collateral, and improved pricing within state-aid rules.

• Trade-off: lower headline leverage than capped schemes, but stronger pass-through benefits to SMEs.

• Outcome: the loan proceeds with the same bank, under normal credit processes, on bankable terms.

Vision 2050, however, is aspirational without many public milestones. For the MDB to be more than a cheerleader, it must design products that make ambition bankable: blending grants with guarantees, de-risking R&D, and co-financing social housing and healthcare—while publishing time-bound KPIs so progress is measurable. That means stating, in plain numbers, how the Bank intends to perform: target private-capital multipliers, the share of green/digital projects, median approval times with partner banks, claim ratios, and—crucially—how many viable SMEs actually receive improved terms. 

MDB also acts as a signpost and structuring partner for EU resources, aligning European facilities with Maltese needs and, where relevant, helping projects connect into specialist European programmes, including those focused on alternative-fuels infrastructure. For large or complex projects, the ability to blend national priorities with European balance sheets is where a small development bank can widen its footprint.

Alison Micallef, a risk manager turned development banker, argues that taking the right risks is the only way to build resilience. “Our purpose is simple,” she says. “To empower businesses, unlock investment, and contribute directly to Malta’s long-term socio-economic resilience.”

Already, the MDB has had an impact on Malta’s economy. Under Alison Micallef, the Bank isn’t just talking about Vision 2050—it’s acting on it: rolling out the Sustainability Guarantee through local banks, opening channels to European facilities, and tightening operational plumbing so support lands where it’s needed. The test is now being executed openly. As Micallef puts it: “To raise visibility, we are strengthening outreach through chambers of commerce, SME networks, industry associations, and professional firms. Our goal is to ensure that businesses with viable projects are supported, rather than discouraged, by complexity.”

If Malta is to transition from a pay-as-you-go approach to a plan-as-you-grow investment strategy, risk-sharing must become routine. The promise is not a slogan but a scorecard: publish the KPIs, show the leverage, and let the portfolio speak. Faster does not mean looser; it means clear rules, visible results, and finance that gets where it should—on time, on merit, and on mission.

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