Malta’s international financial centre ‘at unprecedented all-time high’

During a busy month for the custodian of Malta's financial services brand, the magnificent Magazino Hall at Valletta Waterfront was the striking venue for FinanceMalta's 5th Annual Winter Networking Reception which welcomed over 100 corporate and affiliate members to a celebratory gathering and fundraiser for Din l-Art Helwa (National Trust of Malta).

FinanceMalta is the public-private partnership set up to promote Malta's international financial centre.

FinanceMalta Chairman Kenneth Farrugia articulated the recent selection of Malta as Europe's favourite location for Hedge Funds, explained the extensive media activity and social media implemented by FinanceMalta, as well as delineating how significant the growth of the financial services cluster has been to Malta's economy with just under €10 billion in net asset value, 620 funds, 133 fiduciary licences, 28 credit institutions, 66 insurance operators, 26 fund administrators, 6 custodians, together with 18 captives and cells.

In his address, Farrugia explained how part of this success had come about due to 4 key "attractiveness criteria" which included Malta's comprehensive legal and regulatory framework, the presence of an accessible yet meticulous regulatory body, cost competitiveness and equally important the industry's responsiveness and can do mindset.

"Malta ranked within the top 20 in all the primary indicators in the World Economic Forum's Global Competitiveness Index 2012 - 2013, Financial Market Development, Soundness of the Banks, Regulation of Securities Exchanges, Strength of the auditing/reporting standards, Quality of the Education System and Quality of Math and Science Education."

Farrugia also highlighted that the International Monetary Fund (IMF) noted in its annual report on the Maltese economy that the sensitivity of the Maltese banking sector to sovereign risk events in Europe is low given very low direct exposures to vulnerable countries, as well as domestic banks' reliance on a traditional retail deposit-based banking model containing over €40 billion in local deposits.

In his address, Prime Minister Joseph Muscat said: "Government was fully supportive of the growth of this industry and the presence of a stable economic and political environment was equally conducive to the growth of this industry... education is equally pivotal in the process and it is firmly in the government's plans to further strengthen Malta's educational system to ensure that the industry is supported through the availability of skilled personnel."

73% of Malta bank borrowings and deposits originating from overseas. In 2013, the finance sector supported close to 10,000 jobs in Malta, and the gross value added contribution the sector made to the economy both directly and indirectly is estimated to be moving towards 15% of GDP. The Maltese government has set a target of 2015 for the jurisdiction to become one of the most important financial centres in the region.

"Malta is seeing increased demand from a number of hedge fund managers who are choosing to shift their fund operations to Malta in response to both the rising costs of business in their domicile which is amongst others driven by the growing regulatory burden," Farrugia said.

"As a result, Malta is emerging alongside London, Geneva and Luxembourg, as another European location for fund managers keen to maintain flexible operating arrangements. Positive coverage by key media such as CNBC, Bloomberg and The Financial Times together with professional publications such as Hedge Fund Review reinforces this interest, and I cannot stress enough that Malta's selection by industry professionals as Europe's favourite hedge fund location is a significant milestone and achievement for the local industry, which is ultimately the result of several years brand building initiatives."