The shock Brexit result this June sent ripples across Europe as individual Member States absorbed the news. And whilst some jurisdictions have been quick to seize the initiative on the back of the uncertainty that UK firms face – especially as it relates to passporting for London's much lauded financial services industry – Malta is focusing on maintaining the harmonious relationship it has with the UK.
"We see ourselves partnering with UK operators to provide solutions to help them sustain their business models; we're not looking to try and take business away from the UK," comments Kenneth Farrugia (pictured), Chairman of FinanceMalta, which promotes Malta's fund management industry overseas (in addition to the insurance sector, trust and foundations sector and wealth management).
"Brexit could present opportunities for UK companies who wish to maintain operations in Europe but it really depends on the passporting issue. Either way, we want to sustain the excellent working relationship we have with the UK," adds Farrugia.
According to FinanceMalta, Malta is now home to more than 580 funds with an aggregate AUM of EUR9.7 billion. It is home to 70 fund managers and 27 fund administrators and has 155 Category 1 licensed entities (administrators, depositaries, etc) in addition to 115 Category 2 licensed entities; up from 109 at the end of 2015.
Financial and insurance activities contributed EUR149.0 billion or 97.9 percent to the total foreign direct investment position in Malta last year, according to official statistics published by the National Statistics Office (NSO).
"Financial services is an important industry for any jurisdiction's economy because of the multiplier effect that extends to the whole economy. From a regulatory and legal perspective it is difficult to differentiate yourself from other jurisdictions. But Malta has some key elements that have enabled it to attract business over recent years.
"The open for business mindset that prevails in Malta is critical. Not only as far as service providers and practitioners are considered but even from a political and regulatory perspective there exists an open for business mindset. Malta implemented all the directives in a very timely manner; AIFMD, UCITS IV and so on," says Farrugia.
Indeed, there is a real culture of getting things done in Malta.
Fund promoters can easily meet with the MFSA in days, not months. Equally, given the size of the island (just 315 square kilometres), it allows asset managers to quickly organise meetings with other asset managers, lawyers and audit firms. Then there's the cost competitiveness of the jurisdiction. Start-ups and established managers wishing to launch new products have to focus on costs given the way that hedge funds have suffered, performance-wise, in recent times.
"They need to look at their expense ratios and manage them as best as possible. Finding a jurisdiction that is open for business, that gets things done, and also offers cost-effective solutions – that is a compelling opportunity.
"Not only that, but fund promoters are able to structure Maltese funds using a range of different legal personalities; partnerships, SICAVs, trusts, contractual funds. This gives them the flexibility to structure products in such a way that best suits their needs and target market," concludes Farrugia.
FinanceMalta is organising an asset management information seminar in London on 20th October where it will be discussing fund structuring solutions in Malta and details of the new NAIF regime