Speakers at last week’s FinanceMalta’s fourth annual conference, entitled “Malta’s Financial Services Industry − Gearing Up To Sustain Growth”, were in agreement that the country is at long last emerging from the financial crisis.
The conference’s speakers from overseas included Karel Van Hulle, Head of Unit, Insurance and Pensions, European Commission; Eddy Wymeersch, chairman of the European Corporate Governance Institute and of the Public Interest Oversight Board; Vito Spada is Professor of Banking and Finance at the Università del Salento in Lecce, Italy and Karen Ward, Senior Global Economist at HSBC UK.
Maltese speakers included Prime Minister Lawrence Gonzi, Tonio Fenech, Minister for Finance, the Economy and Investment, Professor Joseph V. Bannister, chairman of the Malta Financial Services Authority and Kenneth Farrugia, chairman of FinanceMalta, as well as a number of local practitioners.
Dr Gonzi stated in his opening remarks, “Not only did Malta’s financial sector escape unscathed from the global crisis but the sector registered consecutive double-digit growth rates. In 2010, the financial services sector grew by 30 per cent, confirming its strong fundamentals and its potential as one of Malta’s main economic derivers. With over 9,500 employees, 1,000 of which over the last three years, confirms that the sector is fast becoming a key motor of employment growth.”
FinanceMalta chairman Kenneth Farrugia stated, “While Europe has faced sovereign-led challenges since our conference last year, there are encouraging economic headline data for Malta. There is recovery in the tourism and manufacturing sectors. Overall, the services sector remains strong and resilient. In fact, financial intermediation led the FDI’s account for 83 per cent of total FDIs for the six-month period to June 2010.”
Eddy Wymeersch spoke about the new EU supervisory system’s effect on financial services practitioners through direct regulation rather than on the need for arbitrary cessation or compliance. This, the European Commission argues, is needed to insure financial stability, market integrity and its enforcement through Commission procedure, not through national jurisdictions.
On a related subject, Professor Bannister presented “A Changing Regulatory Landscape” based on the need to address the financial crisis of 2007/8 with a new system of financial industry supervision in place and three European Supervisory Authorities that will regulate financial market competences. The Capital Requirements Directive (CRD) has already been revised to reinforce capital rules for bank’s trading book and for complex derivatives. Professor Bannister showed how the CRD will be revised this year to implement the Basel III agreement that significantly increases the levels of capital which banks and investment firms must hold to cover their risk-weighted assets. Better risk management in financial institutions will be facilitated by rules already brought in (via the 2010 revision of the CRD) governing remuneration and bonuses in financial institutions and reducing incentives for short-term risk taking.
In her presentation “The World in 2050: Understanding the rise and implications of the growth in the emerging markets”, Karen Ward discussed how emerging markets will power global growth over the next 40 years given the high price that the developed economies need to pay for maintaining their legacy energy resources.
Dr Vito Spada explored a new perspective on how the global economy is emerging from the crises. He demonstrated the comparatively balanced European economy compared to Japan and the US in terms of financial services returns as share of GDP and share of public debt set against a backdrop of relatively stable private sector output throughout the period of the last 10 to 20 years.
All the presentations and speeches made during this conference will be made available for members to download from the login area on FinanceMalta’s website www.financemalta.org. A number of podcasts highlighting the event will also be available.