Malta to take tough stance on EU passporting rights for UK financial services

Malta will insist that the UK’s banks and financial services not be allowed to retain their passporting rights, unless they sign up to the same conditions that binds their European counterparts.

Addressing a meeting of the MEUSAC Core Group ahead of the December meeting of EU leaders, Muscat reiterated that any Brexit deal struck with the UK “must be inferior to EU membership”.

“Some European countries are of the opinion that Malta is acting as a covert agent for the UK and that we are trying to make life easy for them. However, my interests lie with the Maltese citizens, in whose interests it is for the UK to be given an inferior deal.

“For example, it cannot be the case that British financial services companies maintain their passporting rights to all EU countries but without obligations that come with membership. The rights that come with EU membership cannot be separated from their obligations.”

The EU’s ‘passport’ allows British banks and financial companies to sell their services across the EU without requiring additional local licenses. The head of the German Bundesbank has warned that the UK will lose this privilege if it decides to leave the single market.

Mark Boleat from the City of London Corporation warned that securing passporting rights is “a real problem for some businesses” but ratings agency Moody’s has insisted that the City will be able to withstand the loss of those rights.

Data provided by the UK’s Financial Conduct Authority shows that 5,476 British firms hold at least one passport to do business in another EU or European Economic Area member state.

Back in February, Muscat said that a potential Brexit could boost Malta’s financial services industry in that UK-based companies might be tempted to relocate to an EU member state.

During today’s meeting with social partners, Muscat expressed optimism that a reciprocal deal can be struck to safeguard the rights of EU citizens living the UK and UK citizens living in EU member states.

‘No Maltese assets exposed to troubled Italian banks’

Elsewhere, Muscat played down concerns by GRTU president Paul Abela that Malta could be severely impacted by troubles at the Italian bank Monte dei Paschi di Siena (MPS).

“From preliminary information, I can confirm that no Maltese assets are exposed to the Italian banks,” he said. “However, an Italian banking crisis would reduce the spending power of Italians, who are important clients in Malta’s tourism market.”

Plans to bail out the MPS have been thrown into doubt after Matteo Renzi resigned as Italian Prime Minister in the wake of a decisive referendum loss on constitutional reform on Sunday.

MPS and advisors JPMorgan and Mediobanca are set to meet today to decide whether to go ahead with a €5 billion recapitalisation of the bank. In the event that the recapitalisation plan fails, the Italian state is reportedly expected to nationalize the bank which could plunge the nation’s banks into a deeper crisis.