Fund’s pitch for ‘Malta Solution’ to Brexit woes

Malta will benefit more than any other financial centre in Europe from Brexit, according to international asset management firm Managing Partners Group

30 March 2017, 11:04am
While Malta offers financial firms wishing to operate in the European Union several benefits, the alternatives all have serious flaws that make them comparatively less attractive
While Malta offers financial firms wishing to operate in the European Union several benefits, the alternatives all have serious flaws that make them comparatively less attractive
Malta will benefit more than any other financial centre in Europe from Brexit, according to international asset management firm Managing Partners Group (MPG).

MPG’s capital markets team will be marketing what it has dubbed ‘The Malta Solution’ at a company seminar in London, on 30 March. “Malta will be the biggest beneficiary following Brexit. After London, it should be the first choice for a financial firm to establish a branch or secondary office because its residents speak English and are well-educated, it provides easy access to the EU and it has an efficient regulatory process,” MPG chief executive officer Jeremy Leach said.

“It is politically stable, which is not so easy to say with regards to Italy and even France, while it also has a great financial rating, unlike Greece.

“Dublin is good and it offers English but it is more expensive and less tax-efficient than Malta while all the other options in Europe such as Luxembourg, Liechtenstein, Norway, Switzerland or Gibraltar have one or more flaws that weaken their case.”

Leach said that while Malta offers financial firms wishing to operate in the European Union several benefits, the alternatives all have serious flaws that make them comparatively less attractive.

With its EU and Commonwealth membership, tax framework, both domestically and internationally with 65 tax treaties with other countries and securitisation legislation, Leach said Malta was “the only EU jurisdiction outside of Luxembourg that has the legislation in place to offer these flexible tools.”

With the UK’s expected triggering of Article 50 and the start of its departure from the European Union, the European Central Bank recently also confirmed it would fast-track the authorisation of banks leaving the UK because of Brexit.

That means the ECB could temporarily forego its requirement to pre-approve the financial models banks use to determine risks, provided that these models have already been approved in Britain, ECB board member Sabine Lautenschlaeger told bank executives

Such a fast-track regime would apply across all European banking markets, which turns the entire European landscape into a level playing field since different member states cannot leverage their regulatory advantages against each other.

Banks would therefore not need to undergo a lengthy initial test of their risk models, which can take months for those reviewing these internal controls.

Financial centres like Dublin, Frankfurt, Paris, and Luxembourg – as well as Malta – will be eager to grab this kind of business from London, if the banks’ models are already approved by the UK’s Prudential Regulation Authority.

Britain will trigger divorce proceedings with the EU on March 29, which will mean UK-based banks will lose their rights to access the EU’s single market from London.