Malta com­pet­ing for Bri­tish busi­ness

Malta Independent - - NEWS -

Many of the world’s ma­jor banks who have their Euro­pean head­quar­ters in Bri­tain are pre­par­ing to move some of their op­er­a­tions out of Bri­tain in early 2017 due to the un­cer­tainty over the coun­try’s fu­ture re­la­tion­ship with the Europe.

The UK fi­nan­cial sec­tor em­ploys more than two mil­lion peo­ple and makes up al­most 12% of the econ­omy. Banks in Lon­don de­pend on a Euro­pean pass­port to serve clients across the 28coun­try bloc. Lenders worry that this right will end af­ter Brexit.

There is at present a race among Euro na­tions to try and at­tract busi­ness from Lon­don when Brexit hap­pens.

There are, of course, the ma­jor play­ers – Frank­furt, home of the ECB, and Paris – but then there is a sort of Sec­ond Di­vi­sion, in­clud­ing ju­ris­dic­tions like Ire­land… and also Malta. Ac­cord­ing to an ar­ti­cle in the Fi­nan­cial Times last week, even Madrid in Spain is com­pet­ing in this Sec­ond Di­vi­sion.

Each of the com­pet­ing na­tions is watch­ing the com­pe­ti­tion. We do not know, or we are not be­ing told, what Malta is do­ing to at­tract busi­ness, but other com­peti­tors are watch­ing us with in­ter­est.

An ar­ti­cle by John Whe­lan which ap­peared in The Ir­ish Ex­am­iner, and which was re­pro­duced in this week’s The Malta Busi­ness Weekly, ex­plains how the Ir­ish are look­ing over Malta and find­ing out its plus points.

Mr Whe­lan writes: “Malta is po­si­tion­ing it­self as an al­ter­na­tive for com­pa­nies will­ing to en­ter the

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EU mar­ket, and plans to use the EU Pres­i­dency, which passes to Malta for the first time in Jan­uary 2017, to pro­mote it­self to UK-based in­ter­na­tional banks.

“A re­cent visit to the is­land’s highly com­pet­i­tive, English-speak­ing (yes, we are not the only ones tout­ing this ad­van­tage af­ter Bri­tain ex­its) and on­shore EU ju­ris­dic­tion al­low­ing “pass­port­ing” and “re-domi­cil­i­a­tion” of funds, with an ef­fi­cient fis­cal regime, a balmy Mediter­ranean cli­mate and an eth­i­cal and pro­fes­sional work­force, left me with the im­pres­sion that we will need to put our best foot for­ward to at­tract fi­nan­cial ser­vices from Lon­don as the Brexit talks get un­der­way next year.”

He then adds: “Malta, in a Tro­jan-horse-likestrat­egy, 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,” said Ken­neth Far­ru­gia , chair­man of Fi­nance Malta, which pro­motes Malta’s fund man­age­ment in­dus­try over­seas, as well as its in­sur­ance sec­tor, trust and foun­da­tions and wealth man­age­ment.

“Fi­nan­cial and in­sur­ance ac­tiv­i­ties con­trib­uted €149bn or al­most 98% of all for­eign di­rect in­vest­ment in Malta last year. It is ob­vi­ously an im­por­tant in­dus­try for Malta.

“From a reg­u­la­tory and le­gal per­spec­tive it is dif­fi­cult to dif­fer­en­ti­ate Malta from other ju­ris­dic­tions such as Lon­don, Paris, Frank­furt, Rome or Dublin.

“But Malta has some key el­e­ments that have en­abled it to at­tract busi­ness over re­cent years, not least of which is the spe­cial tax regime to at­tract highly qual­i­fied and skilled peo­ple to the coun­try.

“The scheme en­ables them to avail of a flat 15% on their in­come, which is very at­trac­tive for peo­ple re­lo­cat­ing from cities like Lon­don where the tax rate is much higher.

“This works out at about half the spe­cial Ir­ish in­come tax rate un­der the Spe­cial As­signee Re­lief Pro­gramme, or Sarp, used to at­tract for­eign na­tion­als to Ire­land’s fi­nan­cial ser­vices sec­tor.”

Com­pa­nies lo­cated in Lon­don are do­ing their home­work and com­par­ing be­tween ju­ris­dic­tions.

Mr Whe­lan quotes An­thony Brown, the chief ex­ec­u­tive of the lobby group Bri­tish Bankers As­so­ci­a­tion in a re­cent in­ter­view: “Most in­ter­na­tional banks now have project teams work­ing out which op­er­a­tions they need to move to en­sure they can con­tinue serv­ing cus­tomers, the date by which this must hap­pen, and how best to do it.

“Their hands are quiv­er­ing over the re­lo­cate but­ton. Many smaller banks plan to start re­lo­ca­tions be­fore Christ­mas; big­ger banks are ex­pected to start in the first quar­ter of next year,” he said.

One must ask: What is Malta do­ing to at­tract such busi­ness to Malta?

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