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The banking around in Malta’s world
General view of Malta’s banking
The potent banking sector in Malta has long been found to be the main and most important prize of the country, supporting the development of various other sectors. For example the capital buffers held by local banks are among the highest in Europe. The Maltese banks have returned consistently solvency indicators are almost double the EU average. Malta has seen a significant change in the banking sector over the last decade from a strictly controlled in the public sector in one of the liberalization and foreign ownership.
The country has attracted some of the most highly respected names in institutional finance to establish operations in Malta and use the country as a strategic launch pad for future expansion into Europe, Africa and the Middle East. The Tier 1 regulatory capital of the domestic banking sector sits at 11.8% (June 2014), which is almost double the required rate set by the Basel III accord.
Malta Financial Services Authority
The Malta Financial Services Authority (MFSA) is the country’s single regulator responsible for issuing licenses and the supervision of credit and financial institutions. Its high regulatory standards are modelled on EU legislation and best practice, whilst at the same time allowing for the flexibility necessary in a modern and dynamic banking environment, without imposing undue bureaucratic burdens on operators. However, as from November 2014 the European Central Bank (ECB) took over the responsibility for banking supervision at top tier level, and the Maltese banking sector is facing tougher regulatory and capital requirements emanating from the implementation of the new European Union banking Legislation (known as CRDIV/CRR), which came into force at the start of 2014.
Maltese banks remain well capitalized, and have high liquidity ratios as well as sound, well diversified portfolios. Their funding is sourced mainly from customer deposits, and their prudent business model has enabled them to emerge largely unscathed from the turmoil of the 2008 banking crisis - The World Economic Forum’s Global Competitiveness Report 2014-2015 ranked Malta amongst the top ten countries insofar as soundness of the banking system is concerned out of 144 economies and 13th for strength of auditing and reporting standards.
Banking institutions in Malta are regulated by the Banking Act, which is founded on European Union legislation and is compliant with the Basle Core Principles. The non-bank financial institutions are regulated by the Financial Institutions Act. While Malta has the same regulatory standards as other EU member states, the country’s framework allows for the flexibility necessary in a modern and dynamic financial environment, without imposing undue bureaucratic burdens on operators.
Malta is ranked first in the timely transposition of EU internal market laws into national law. In 2010, the provisions of the Payment Services Directive, regulating payment institutions were transposed into Maltese law. This was followed by the EU Electronic Money Institutions Directive, regulating Electronic Money Institutions, transposed in 2011.
Apart from its ideal geographical location, the benefits of EU membership and euro adoption, and a prompt, efficient and accessible Regulator, Malta offers many other advantages as a domicile for international banking business.
Malta has a good source of well-educated people and a cadre of qualified professionals in law, accounting, taxation, IT and other disciplines required by the financial services industry. The workforce possesses good language skills – English is an official language – and a positive work ethic prevails.
Costs in Malta are also measurably lower than in other European centres, with salaries averaging one-third to one-half of the EU Level. Other operating costs are likewise competitive, and excellent office space and housing are available at reasonable rents.
The Maltese fiscal regime has also been one of the main drivers in creating an attractive investment environment. Malta’s tax system has been deemed by the European Commission to be compliant with EU non-discrimination principles, and with proper planning and structuring; investors can achieve considerable fiscal efficiency using Malta as a base.
According to above information the Benefits of Banking in Malta are, firstly the secure location for savings and assets, secondly there are around 70 double taxation treaties. The country's banking sector has been judged the 10th soundest in the world (out of 144 countries) according to The World Economic Forum’s Global Competitiveness Report 2014-2015. The Diverse industry providing a wide range of services, including custodian banking, trade and project finance as well as specialist wealth.
Key Opportunities for Investing in Malta
Also some Key Opportunities for Investing in Malta are the Healthy and Stable Sector. The banking sector has suffered no systemic shocks or banking failures thanks to its prudent approach to banking.
Moreover the Financial Institutions enjoy more relaxed and cost-effective licensing and regulatory requirements than traditional credit institutions and provide access to a wide range of market places.
Furthermore Malta’s e-Business industry is on a strong upward trajectory and several hundred gaming and tech companies are set-up on the island requiring various services from payment gateways as well as factory operations.
Noteworthy is also the Niche Banking Services. Malta’s constantly expanding international finance sector offers interesting growth opportunities in specific areas such as ship finance and investment banking.
Malta’s number of funds is rapidly growing which leads to the need for more specialised banking services. With currently only a few global hard-hitters in the market, credit institutions – both big and small – will find scope to capitalise on this opportunity.
Finally, the Innovative Stock Exchange is also a huge point that is needed. Namely the award-winning Malta Stock Exchange (MSE) is gaining reputation as an innovative exchange with a fast listing process, competitive listing and administration fees and accessible and professional staff.
The MSE Central Securities Depositary enjoys a link with Clear stream, which provides international access to securities and is conducive to increasing the level of liquidity of the assets on the market.