‘Offshore’ Malta slips two places in financial centres index

Malta is emerging alongside Geneva, Luxembourg, Dublin and Zug as another secure onshore European location for fund managers and other financial services entities, according to FinanceMalta, the public-private partnership set up to promote Malta's financial services sector.

But Malta dropped in the ranking of the recent Global Financial Centres Index (GFCI), moving two places to 72^nd place after being overtaken by Tallinn and Riyadh.

"It is a measure of the competition for financial services that, although Malta dropped in the rankings, the island's retained the same ratings points. Malta was overtaken by Tallinn and Riyadh. Malta Financial Services moved from 70th to 72nd place in the ranking retaining its overall rating of 568 points," FinanceMalta said in a statement.

Malta currently enjoys a growing presence in insurance, banking, trusts funds, and wealth management each of which has registered a solid performance during 2011.

Malta is rated by GFCI in the top-10 offshore centres, an anomaly produced by Malta's legacy situation prior to EU entry.

"That neatly underlines the global nature of competition between financial centres. While this survey, the 11th since the index began, shows a decline in the ratings of Asian/Pacific centres, Malta has not yet been reclassified by this publisher together with the main cluster of European onshore centres of which it forms a part," FinanceMalta said.

Unsurprisingly, London has led the GFCI since its creation in 2007 but its top place will depend on regulation and taxation striking the right balance between anti-competitiveness and confidence-boosting stability.

"That is even more true for jurisdictions still absorbing the shocks of the banking crisis, and it is well documented that Malta's solid regulatory procedures ensure the country is well placed to build its reputation further in the financial services industry," FinanceMalta said.

The GFCI is compiled by Long Finance as an international survey of finance sector professionals, and published twice a year by the City of London Corporation.

The index combines factors such as office rents and transport infrastructure with the perceptions of finance professionals on the more volatile factors affecting the business environment, making it a barometer of the relative attractiveness of juridictions across the world.

While London remains in top place, just above New York, potential regulatory changes in the UK following the Vickers report into the banking industry could have a negative effect on UK centres. In addition, the threat of a financial transaction tax risks reducing competitiveness unless it is introduced in all financial centres. This is significant because taxation, both personal and corporate, was listed as by far the most important factor in terms of competitiveness.

"In a global market, long-term commitment to financial services is also essential to providing confidence. Stability, transparency of regulation and lack of corruption are vital to confidence. Since these factors are now priorities for the Maltese regulatory body, it is possible that Malta may quickly improve their position," FinanceMalta said.

FinanceMalta said the Malta Financial Services Authority (MFSA) has provided a secure and stable framework for prudential supervision and prevention of market abuse. Today financial services contribute some 12% to Malta's gross domestic product.

"Malta is also an emerging regional hub and key location for wealth managers, family offices, high-net worth individuals and retirees. Given our favourable residency and tax laws, innovative investment vehicles, including specialist funds regimes and trust companies, excellent legal and accountancy services, and a warm and sunny climate, all within the European Union, the country has begun to appeal to a wide audience as evidenced by the growth of the industry over the last couple of years," FinanceMalta said.