Malta's Financial Services Industry - Performance in 2013

Dr. Priscilla Mifsud Parker | Published on 22 Jan 2014

Chetcuti Cauchi
Malta's financial services industry has experienced significant growth throughout 2013. The financial services industry in Malta accounts for 12% of Malta's GDP and is worth more than €1 billion in direct and indirect revenue.  The industry provides employment for approximately 10,000 people. 
 
Various reputable agencies have analyzed the financial services industry in Malta and its performance for 2013.
 
The first report issued about Malta in 2013 was in April and was published by Fitch Ratings.  In this report the Maltese banking sector was given a very strong position and the report maintained that banks in Malta would not encounter difficulties as other banks in neighboring countries. One of the main reasons for stability in this industry is the fact that Maltese banks are not as reliant on non-resident deposits or capital markets as their foreign counterparts.
 
This was also confirmed by the European Commission in its Alert Mechanism Report. The EC commented that Malta's financial sector is internationally oriented and is not dependant upon the domestic economy and thus it did not pose risks for Malta's economy.  
 
The Commission’s outlook on Malta's economic performance was positive: “The Maltese economy demonstrated resilience throughout the crisis. Economic growth in Malta in the years before the crisis was in line with the average for the euro area.”
 
Standard and Poor’s report also confirmed Malta’s stable outlook.  It reported that Malta's growth performance was one of the strongest in the eurozone with real GDP per capita averaging just below 1% annually between 2007 and 2012. This report saw “Malta's domestic financial system as stable”.
 
In June, International Monetary Fund carried out an in-depth analysis of Malta’s economy and financial services industry. “Malta has shown remarkable resilience in the face of a major crisis in Europe. Since the beginning of the crisis, the average growth of the Maltese economy has been one of the best in the euro area and the unemployment rate remains one of the lowest. This resilience was under-pinned by robust service sector export growth and a sound banking sector. As a result, the current account balance has improved gradually in recent years, turning into surplus” claimed the IMF.
 
In September , the influential World Economic Forum’s Global Competitiveness Report confirmed Malta’s placing as a top-20 financial services jurisdiction. Specifically Malta was highly ranked in terms of soundness of its banking institutions (14th), the regulation of Securities Exchanges (17th) and the strength and reporting standards (13th).
 
The OECD's report highlighted the quality of the Maltese tax framework and stated that Malta's tax system was in full conformity with the requirements related to International transparency standards and exchange of information for tax purposes. Malta climbed six places in the overall classification placing 41st out of 148 countries. 
 
Malta's financial services industry was highly praised in the Hedge Funds Review Service Provider Rankings (HFR SP) 2013 published in late November. Malta has been named European domicile of choice amongst investors and managers with a total of 22.1 % of all European votes cast in the annual survey.  Malta is therefore the domicile of choice for Hedge Funds and related services companies including hedge fund managers. 
 
Margie Lindsay, Executive Editor of Hedge Funds Review said: “Malta’s attractiveness as a domicile lies in its competitive advantage on cost as well as a regulator that is open to new strategies and approachable by fund manag-ers who are just starting out.”

 



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