FinanceMalta, the public-private partnership set up to promote Malta’s financial services sector, says that Malta is emerging alongside Geneva, Luxembourg, Dublin and Zug, as another secure onshore European location for fund managers and other financial services entities keen to maintain flexible operating arrangements. Malta currently enjoys a growing presence in five key sectors in the financial services industry – insurance, banking, trusts funds, and wealth management, each of which registered a solid performance during 2011, with FinanceMalta being part of the instrument to attract business to Malta in a universal format, in line with the government’s vision and industry share. Malta is clearly establishing itself as a dynamic, cost-efficient and English-speaking domicile in the European Union for the financial services sector.

The recent Global Financial Centres Index (GFCI) compiled by Long Finance is an international survey of finance sector professionals. It is compiled and published twice a year by the City of London Corporation.

The cities representing the weakest euro economies (Athens, Dublin, Milan, Madrid and Lisbon) have continued their slide down the rankings, as evidenced in the last report. It is a measure of the competition for financial services that, although Malta dropped in the rankings, the island’s retained the same ratings points. Malta was overtaken by Tallinn and Riyadh. Malta Financial Services moved from 70th to 72nd place in the ranking, retaining its overall rating of 568 points.

The Global Financial Centres Index (GFCI) survey combines factors such as office rents and transport infrastructure with the perceptions of finance professionals on the more volatile factors affecting the business environment, making it a barometer of the relative attractiveness of jurisdictions across the world.

While London remains in top place, just above New York, potential regulatory changes in the UK following the Vickers report into the banking industry could have a negative effect on UK centres. In addition, the threat of a financial transaction tax risks reducing competitiveness unless it is introduced in all financial centres. This is significant because taxation, both personal and corporate, was listed as by far the most important factor in terms of competitiveness.

In a global market, long-term commitment to financial services is also essential to providing confidence. Stability, transparency of regulation and lack of corruption are vital to confidence. Since these factors are now priorities for the Maltese regulatory body, it is possible that Malta may quickly improve their position.

Malta is rated by GFCI in the top-10 offshore centres, an anomaly produced by Malta’s legacy situation prior to EU-entry. That neatly underlines the global nature of competition between financial centres. While this survey, the 11th since the index began, shows a decline in the ratings of Asian/Pacific centres, Malta has not yet been reclassified by this publisher together with the main cluster of European onshore centres of which it forms a part. Unsurprisingly, London has led the GFCI since its creation in 2007 but its top place will depend on regulation and taxation striking the right balance between anti-competitiveness and confidence-boosting stability. That is even more true for jurisdictions still absorbing the shocks of the banking crisis, and it is well documented that Malta’s solid regulatory procedures ensure the country is well placed to build its reputation further in the financial services industry.

The Malta Financial Services Authority (MFSA) actively encourages a culture of openness between regulators and businesses. Extensive new legislation has been introduced in recent years, and each new piece of regulation serves a strategic purpose. The ultimate aim of regulation is to provide a secure and stable framework for prudential supervision, consumer protection, market surveillance and prevention of market abuse, insider dealing and money laundering. In recent years, Malta has continued to strengthen its position as a reputable international financial services centre with financial services contributing some 12 per cent to the island’s Gross Domestic Product.

Malta is also an emerging regional hub and key location for wealth managers, family offices, high-net worth individuals and retirees. Given the favourable residency and tax laws, innovative investment vehicles (including specialist funds regimes and trust companies), excellent legal and accountancy services, and a warm and sunny climate, all within the European Union, the country has begun to appeal to a wide audience as evidenced by the growth of the industry over the last couple of years.