Louder than words

Malta
ADVERTISING SUPPLEMENT
Discover travel, culture, nature and
business in the unspoilt Mediterranean
1
Saturday, September 18, 2010
The Rolex Middle Sea Race starts in Malta’s
Grand Harbour on Oct. 23. Watch from the
Saluting Battery in Valletta or Fort St. Angelo.
Peter Drennan
Director
publishing
M +44 (0) 7979
E peter@archim
Louder than words
Archimedia Lon
The Coliseum,
10 Salisbury Pr
London N8 0R
T +44 (0) 20 84
E hello@archim
www.archimed
Some tell us that we do not blow our
trumpets well enough. Truth is that we are
more focused on getting the job done.
Malta is home to 1.2 million tourists per year, 450
i-gaming companies, 200 foreign direct investors and
25 international banks. No need to speak to us…
speak to them as they are our best testimonial.
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Bank of Valletta
Corporate Finance | Trusts | Wealth Management | Payment Solutions | Fund Services
Bank of Valletta has contributed to the economic development of Malta for the
past two centuries. Today we actively endorse the nation’s drive and ambition
to transform itself into a centre for financial excellence.
With a well-developed network of correspondent banks and representative
offices, we have the infrastructure and expertise to manage corporate banking
for companies registered across international jurisdictions.
At Bank of Valletta we aspire to exceed customer expectations by offering a
trusted, genuine and truly caring service, adding value every time we connect.
BOV 26211
www.bov.com
+ 356 2131 2020
Bank of Valletta p.l.c. is licensed to conduct investment services business and to
provide trustee services by the Malta Financial Services Authority.
Issued by Bank of Valletta p.l.c., 58, Zachary Street, Valletta VLT 1130 - Malta
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Malta’s Exclusive Boutique Hotel
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ADVERTISING SUPPLEMENT
8 Malta
Saturday, September 18, 2010
Malta joined the eurozone in 2008
darrin zammit lupi
Betting on banking
finance Key to the government’s development blueprint
is Malta’s emergence as a regional financial centre; and
the process has started. By Anthony Manduca
M
alta, the EU’s smallest mem-
ber, is fast gaining a big reputation as a financial centre. And,
in line with government aims,
financial services are an increasingly important
pillar of the economy, with impressive year-onyear growth.
“We are already ranked among the top
five emerging financial centres in the world in
the City of London’s Global Financial Index,”
the Prime Minister, Dr. Lawrence Gonzi, said
in May. “The challenge now is to remain at the
forefront of this sector.”
And Malta has much to offer: a welltrained, English-speaking workforce, the presence of the “Big Four” accountancy firms, a
low-cost environment, an advantageous tax
regime backed up by 55 double taxation agreements, an EU-compliant yet flexible domicile,
a sophisticated ICT infrastructure, and a single
accessible regulator which is able to act with
speed and flexibility.
Despite the financial crisis, the financialservices industry in Malta grew by a perky 22%
last year, and employment in the sector rose to
more than 6,000. The sector now accounts for
some 15% of GDP (including its indirect contribution) and 60% of FDI into Malta takes the
form of capital inflows in the financial sector.
It was Malta’s membership of the EU in
2004 that was the catalyst for the rapid expansion. Since then the number of funds and subfunds domiciled in Malta has grown to over 450,
investment services companies have doubled
from 50 to 100, banks have increased from 16 to
24, insurance management companies from 0
to 13 and insurance companies from six (mainly
domestic) to 50.
But the target, Finance Minister Tonio
Fenech says, is for financial services to account
for 25% of GDP by 2015. “Considering the substantial growth we have experienced over the
past couple of years, even during the international crisis, I believe that target is reachable.”
The Prime Minister has acknowledged the
need to guide more students towards finance
disciplines to ensure a steady stream of qualified human resources in a tight labour market.
“There are three main sectors that underpin the financial-services industry in Malta:
funds, insurance and banking,” says Kenneth
Farrugia, chairman of FinanceMalta. If we look
at funds, the sector grew by 105 funds last year.
We’re seeing more service providers setting up
in Malta, both fund administration companies
as well as fund management companies. So
we’re seeing a cluster take shape.”
A significant advantage Malta offers is the
ability for companies to re-domicile into the finance centre, possibly winning EU-wide passporting rights. Furthermore, investment funds
are exempt from tax while the shareholders of
operating companies are entitled to a 6/7ths
refund of the 35% corporate tax rate provided a
full dividend distribution takes place.
Malta is also an attractive EU location for
the establishment of captive and other insurance and reinsurance businesses, both in life
and non-life. According to the latest figures released by the Malta Insurance Management Association, insurance assets under management
in Malta amount to over €1 billion.
Joe Bannister, chairman of the Malta Financial Services Authority, says Malta’s success in financial services, and its resilience to
the financial crisis, is largely due to the creation of a robust regulatory regime following
international standards and its adherence to
sound banking principles. That prudent business model enabled banks to escape largely
unscathed from the 2008 banking crisis. The
latest World Economic Forum report on global
competitiveness, published earlier this month,
ranked Malta among the top 10 countries for
the soundness of its banking system.
Malta’s banking sector, which domestically
is dominated by HSBC and Bank of Valletta, has
transformed itself from one having four retail
banks serving the domestic market to a reputable international banking centre.
Bank of Valletta chairman Roderick Chalmers says: “We got through 2007, 2008 and
2009 and we got through in good shape. We
were looking forward to a little bit more sunshine and of course the cage has been rattled
again over the last quarter by what’s happening
in peripheral Europe, but I think the response
from policy makers has been the correct one.
Although businesses in Malta traditionally
rely on the banking sector for finance, “over the
past years we’ve seen interest in other sources
of funding, including the capital market,” says
Malta Stock Exchange chairman, Arthur Galea
Salomone. “Last year, for example, the MSE
raised over €800 million and this year it has
raised close to €500 million.”
The eu’s emerging
fund domicile
S
ince Malta joined the EU in 2004, it
has become increasingly popular as
a fund jurisdiction as more funds,
notably hedge funds – some 60% of the
total net asset value of funds administered
by Maltese companies – choose Malta as
their domicile.
The value of assets in respect of funds
domiciled in Malta reached 7.4 billion euros in March (from 0.5bn euros at the end
of 2001) and there are 450 such funds
and sub-funds, including pan-European
retail funds (UCITS) and other forms of alternative investment vehicle. Major British
names already in Malta include Barclays
Capital, which has a major UCITS funds
platform, HSBC, Oceanwood, Liongate
and Finisterre.
And there are clear incentives for more
funds to re-domicile to Malta. Funds domiciled here pay no tax, and companies that
list securities on the MSE are not subject
to capital gains tax. Furthermore, there
is no VAT on fund management, fund administration or custody services and the
transfer of shares in a licensed fund are
exempt from stamp duty. While required
to appoint at least one resident director,
funds registered in Malta are not required
to appoint a local administrator.
“The fact is that investors want a European label,” says the chairman of regulator
MFSA, Joseph Bannister, and managers
are selecting a jurisdiction based on the
quality of the regulation.
Prof. Bannister says he has witnessed
a tremendous increase in enquires about
UCITS funds (funds which can be marketed EU-wide, provided the funds and fund
managers are registered in Malta). There
has also been some re-domiciling of these
funds away from Luxembourg and Dublin
as fund managers seek a regulated but
cost-efficient jurisdiction.
Malta’s tight legislation and highly personalised approach by the regulator, however, ensures that less reputable funds are
not allowed to enter the EU through the
back door. Funds intending to re-domicile
to Malta must prove that they have been operating from their current home for at least
a year before applying to move. —A.M.
Malta is truly your
Mediterranean
gateway for business
and leisure
www.thincmalta.com
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