MFSA newsletter
Annual Report 2007 Wider recognition and continuing growth 2007 saw further steady growth in the Maltese financial services sector, with particularly marked increases in the number of new licences granted in banking, insurance, fund management and...
Annual Report 2007
Wider recognition and continuing growth
2007 saw further steady growth in the Maltese financial services sector, with particularly marked increases in the number of new licences granted in banking, insurance, fund management and investment services.
The MFSA Annual Report, published recently, confirms that in addition to expansion by existing Maltese and foreign concerns, the year witnessed high quality inward investments from the UK, Portugal, US, Germany, Italy, Saudi Arabia and Bahrain.
Acknowledging that the global economy was facing a period of uncertainty and instability, the MFSA believes the outlook for Malta remains positive.
"We cannot foresee the longer term impact on Malta," said MFSA chairman Joe Bannister, "but we should bear in mind that in uncertain times capital tends to seek out quality jurisdictions. Our EU membership and the legislative base, skills and expertise, coupled with our efficient regulatory regime and relatively low costs make Malta an attractive option for businesses that want high quality skills at competitive cost." He adds that "Malta's adoption of the euro will help many EU businesses more clearly see the commercial benefits of operating in Malta".
Among the results registered during the year, the net asset value of funds domiciled in Malta increased by 78 per cent to €8.7 billion, gross premiums written for long-term insurance, which in the previous year had advanced by €63 million, together with a further €136 million in the general business sector, continued to expand at the same rates.
The report also states that Malta is now home to the captive or insurance arms of five Fortune 100 companies, while independent research ranked the jurisdiction ahead of all the other European captive domiciles in cost-efficiency, tailored regulation and protected cell company (PCC) legislation.
By the end of 2007, the aggregate balance sheet totals of all licensed credit institutions had increased by 27 per cent to €37.5 billion, compared to €29.35 billion at the end of the previous year. Aggregate net loans reached €20.96 billion (up by 40.6 per cent) while total deposit liabilities closed the year-end at €19.33 billion (an increase of 29.7 per cent).
At the beginning of 2007, the MFSA published its Strategic Plan for the three years from 2007 to 2009, which set out benchmarks and critical success factors against which to measure progress in key areas. The growth in business seen over the past few years requires a full MFSA review of the regulatory processes in order to better supervise the increasing number of licences. One of the key objectives of the Strategic Plan is to move gradually to risk-based supervision. The purpose of taking a risk-based approach is to focus the authority's resources on the mitigation of those risks which are more likely to pose a threat to the market or to consumers, or that might give rise to financial crime.
Last year the authority instigated 20 training programmes and initiatives. Nonetheless, the report emphasises that Malta's financial services industry has evolved to the stage at which certain skills could soon be in short supply, particularly middle-level technical skills. One of the most important initiatives taken last year was the establishment by the MFSA of an Education Consultative Council, which draws together all the key educational and industry bodies to identify and respond to gaps and opportunities in training provision. The MFSA is also embarking on a major survey and audit of skills and qualifications in the finance sector which will serve as a basis for more structured training programmes in the future.
The MFSA Annual Report 2007 may be downloaded from the MFSA website.
New legislation introduced in 2007:
• Amendments to the Investment Services Act together with the Regulations and third level MFSA Rules relating to the transposition of the EU Markets in Financial Instruments Directive;
• The launch of a new framework for Extraordinary Investor Funds which are subject to a lighter regulatory regime than that applicable to PIFs for Qualifying Investors, while at the same time having more onerous eligibility criteria, such as a net asset threshold of €7.5 million for investors and a higher minimum investment amount (€750,000);
• The alignment of the Insurance Business Act with the EU Reinsurance Directive, which establishes a common approach to supervision and the setting of capital requirements for reinsurers across the EU;
• The updating and refinement of Protected Cell Company legislation.
CESR Chairmen Away meeting held in Malta
CESR, the independent committee of European Securities Regulators, held the Chairmen's Away Day meeting in Malta on April 11. CESR's main role is to improve coordination among securities regulators by developing effective operational network mechanisms to enhance day-to-day supervision and enforcement of the single market for financial services.
CESR also acts as an advisory group to assist the EU Commission in the field of securities and works to ensure more consistent and timely implementation of community legislation in the member states. Securities regulators from the different member states are members of CESR.
The meeting, held in a different EU country every year, proved to be very productive and fruitful, with open and free discussions on CESR policies and working practices.
Malta on list of IMF advanced economies
The International Monetary Fund's April 2008 World Economic Outlook Report has promoted Malta to the Advanced Economies Group, a status it now enjoys along with only 31 other countries in the world. The designation follows Malta's adoption of the euro in January 2008 and is a recognition of the country's success in meeting the criteria of the Maastricht Treaty and in aligning itself with the eurozone economies. Malta was the only one of the 12 most recent EU accession countries to be moved from the Emerging Europe Group to the Advanced Economies Group.
To view the full text of the IMF report visit: www.imf.org/external/pubs/ft/weo/2008/01/pdf/text.pdf
International news
Consultation on banking directives
The European Commission has launched a public consultation on possible changes to the Capital Requirements Directive (2006/48/EC and 2006/49/EC). The Commission is also conducting an impact assessment on the modification of certain provisions.
The purpose of Directives 2006/48/EC and 2006/49/EC is to ensure the financial soundness of credit institutions and investment firms and thus provides the very backbone of day-to-day prudential supervision of these institutions; it follows that this legal framework needs to be regularly updated and refined to respond to the needs of stakeholders.
The consultation takes place in the context of ongoing work related to the Capital Requirements Directive (CRD) at various supervisory and industry fora. The review of the CRD is, in part, also a response to the recent recommendations of the G-7 Financial Stability Forum.
Opinions are sought on: (i) large exposures, (ii) hybrid capital instruments, (iii) supervisory arrangements, (iv) the waivers for banks organised in networks and (v) adjustments to certain technical provisions.
The suggested measures concerning large exposures and hybrid capital instruments and the adjustments to the technical provisions are largely based on advice from the Committee of European Banking Supervisors (CEBS). The working document does not constitute a formal Commission proposal. Nevertheless, informal discussions have already started in the European Banking Committee. Stakeholders are invited to give their views by June 16. The document can be accessed from the following link: http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm
Warnings to Investors
Over the past month the MFSA has received and circulated a number of warnings to investors issued by overseas regulators. Full releases can be accessed from the Warnings for Investors section in the MFSA website.
New licences issued in April
Collective investment scheme licences:
Professional Investor Funds
• Licence issued to NBCG Fund SICAV plc in respect of three sub funds. These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Altma Fund SICAV plc in respect of three sub funds. These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Norvik (Malta) SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Qualifying Investors.
• Licence issued to Virgo Global Equity Master Fund SICAV Ltd (The Master Fund) and to Virgo Global Equity Fund SICAV plc (The Feeder Fund). These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Artis FX Fund SICAV plc (multiclass investment company). This fund is a Professional Investor Fund targeting Qualifying Investors.
Investment services
• Category 2 licence issued to Oceanwood Capital Management (Malta) Ltd.
• Category 2 licence issued to GDP Asset Management (Malta) Ltd.
• Category 1B licence issued to Cevian Capital (Malta) Ltd.
Surrender of licences
• Voluntary surrender of licence issued under the Financial Institutions Act (Cap. 376) to Cremona Exchange Bureau Ltd;
• Voluntary surrender of licence issued under the Financial Institutions Act (Cap. 376) to Change Mart Financial Services Ltd.
MFSA website: http://www.mfsa.com.mt
Registry website: http://registry.mfsa.com.mt
Consumer website: http://www.mfsa.com.mt/consumer
Wider recognition and continuing growth
2007 saw further steady growth in the Maltese financial services sector, with particularly marked increases in the number of new licences granted in banking, insurance, fund management and investment services.
The MFSA Annual Report, published recently, confirms that in addition to expansion by existing Maltese and foreign concerns, the year witnessed high quality inward investments from the UK, Portugal, US, Germany, Italy, Saudi Arabia and Bahrain.
Acknowledging that the global economy was facing a period of uncertainty and instability, the MFSA believes the outlook for Malta remains positive.
"We cannot foresee the longer term impact on Malta," said MFSA chairman Joe Bannister, "but we should bear in mind that in uncertain times capital tends to seek out quality jurisdictions. Our EU membership and the legislative base, skills and expertise, coupled with our efficient regulatory regime and relatively low costs make Malta an attractive option for businesses that want high quality skills at competitive cost." He adds that "Malta's adoption of the euro will help many EU businesses more clearly see the commercial benefits of operating in Malta".
Among the results registered during the year, the net asset value of funds domiciled in Malta increased by 78 per cent to €8.7 billion, gross premiums written for long-term insurance, which in the previous year had advanced by €63 million, together with a further €136 million in the general business sector, continued to expand at the same rates.
The report also states that Malta is now home to the captive or insurance arms of five Fortune 100 companies, while independent research ranked the jurisdiction ahead of all the other European captive domiciles in cost-efficiency, tailored regulation and protected cell company (PCC) legislation.
By the end of 2007, the aggregate balance sheet totals of all licensed credit institutions had increased by 27 per cent to €37.5 billion, compared to €29.35 billion at the end of the previous year. Aggregate net loans reached €20.96 billion (up by 40.6 per cent) while total deposit liabilities closed the year-end at €19.33 billion (an increase of 29.7 per cent).
At the beginning of 2007, the MFSA published its Strategic Plan for the three years from 2007 to 2009, which set out benchmarks and critical success factors against which to measure progress in key areas. The growth in business seen over the past few years requires a full MFSA review of the regulatory processes in order to better supervise the increasing number of licences. One of the key objectives of the Strategic Plan is to move gradually to risk-based supervision. The purpose of taking a risk-based approach is to focus the authority's resources on the mitigation of those risks which are more likely to pose a threat to the market or to consumers, or that might give rise to financial crime.
Last year the authority instigated 20 training programmes and initiatives. Nonetheless, the report emphasises that Malta's financial services industry has evolved to the stage at which certain skills could soon be in short supply, particularly middle-level technical skills. One of the most important initiatives taken last year was the establishment by the MFSA of an Education Consultative Council, which draws together all the key educational and industry bodies to identify and respond to gaps and opportunities in training provision. The MFSA is also embarking on a major survey and audit of skills and qualifications in the finance sector which will serve as a basis for more structured training programmes in the future.
The MFSA Annual Report 2007 may be downloaded from the MFSA website.
New legislation introduced in 2007:
• Amendments to the Investment Services Act together with the Regulations and third level MFSA Rules relating to the transposition of the EU Markets in Financial Instruments Directive;
• The launch of a new framework for Extraordinary Investor Funds which are subject to a lighter regulatory regime than that applicable to PIFs for Qualifying Investors, while at the same time having more onerous eligibility criteria, such as a net asset threshold of €7.5 million for investors and a higher minimum investment amount (€750,000);
• The alignment of the Insurance Business Act with the EU Reinsurance Directive, which establishes a common approach to supervision and the setting of capital requirements for reinsurers across the EU;
• The updating and refinement of Protected Cell Company legislation.
CESR Chairmen Away meeting held in Malta
CESR, the independent committee of European Securities Regulators, held the Chairmen's Away Day meeting in Malta on April 11. CESR's main role is to improve coordination among securities regulators by developing effective operational network mechanisms to enhance day-to-day supervision and enforcement of the single market for financial services.
CESR also acts as an advisory group to assist the EU Commission in the field of securities and works to ensure more consistent and timely implementation of community legislation in the member states. Securities regulators from the different member states are members of CESR.
The meeting, held in a different EU country every year, proved to be very productive and fruitful, with open and free discussions on CESR policies and working practices.
Malta on list of IMF advanced economies
The International Monetary Fund's April 2008 World Economic Outlook Report has promoted Malta to the Advanced Economies Group, a status it now enjoys along with only 31 other countries in the world. The designation follows Malta's adoption of the euro in January 2008 and is a recognition of the country's success in meeting the criteria of the Maastricht Treaty and in aligning itself with the eurozone economies. Malta was the only one of the 12 most recent EU accession countries to be moved from the Emerging Europe Group to the Advanced Economies Group.
To view the full text of the IMF report visit: www.imf.org/external/pubs/ft/weo/2008/01/pdf/text.pdf
International news
Consultation on banking directives
The European Commission has launched a public consultation on possible changes to the Capital Requirements Directive (2006/48/EC and 2006/49/EC). The Commission is also conducting an impact assessment on the modification of certain provisions.
The purpose of Directives 2006/48/EC and 2006/49/EC is to ensure the financial soundness of credit institutions and investment firms and thus provides the very backbone of day-to-day prudential supervision of these institutions; it follows that this legal framework needs to be regularly updated and refined to respond to the needs of stakeholders.
The consultation takes place in the context of ongoing work related to the Capital Requirements Directive (CRD) at various supervisory and industry fora. The review of the CRD is, in part, also a response to the recent recommendations of the G-7 Financial Stability Forum.
Opinions are sought on: (i) large exposures, (ii) hybrid capital instruments, (iii) supervisory arrangements, (iv) the waivers for banks organised in networks and (v) adjustments to certain technical provisions.
The suggested measures concerning large exposures and hybrid capital instruments and the adjustments to the technical provisions are largely based on advice from the Committee of European Banking Supervisors (CEBS). The working document does not constitute a formal Commission proposal. Nevertheless, informal discussions have already started in the European Banking Committee. Stakeholders are invited to give their views by June 16. The document can be accessed from the following link: http://ec.europa.eu/internal_market/bank/regcapital/index_en.htm
Warnings to Investors
Over the past month the MFSA has received and circulated a number of warnings to investors issued by overseas regulators. Full releases can be accessed from the Warnings for Investors section in the MFSA website.
New licences issued in April
Collective investment scheme licences:
Professional Investor Funds
• Licence issued to NBCG Fund SICAV plc in respect of three sub funds. These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Altma Fund SICAV plc in respect of three sub funds. These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Norvik (Malta) SICAV plc in respect of one sub fund. This fund is a Professional Investor Fund targeting Qualifying Investors.
• Licence issued to Virgo Global Equity Master Fund SICAV Ltd (The Master Fund) and to Virgo Global Equity Fund SICAV plc (The Feeder Fund). These funds are Professional Investor Funds targeting Qualifying Investors.
• Licence issued to Artis FX Fund SICAV plc (multiclass investment company). This fund is a Professional Investor Fund targeting Qualifying Investors.
Investment services
• Category 2 licence issued to Oceanwood Capital Management (Malta) Ltd.
• Category 2 licence issued to GDP Asset Management (Malta) Ltd.
• Category 1B licence issued to Cevian Capital (Malta) Ltd.
Surrender of licences
• Voluntary surrender of licence issued under the Financial Institutions Act (Cap. 376) to Cremona Exchange Bureau Ltd;
• Voluntary surrender of licence issued under the Financial Institutions Act (Cap. 376) to Change Mart Financial Services Ltd.
MFSA website: http://www.mfsa.com.mt
Registry website: http://registry.mfsa.com.mt
Consumer website: http://www.mfsa.com.mt/consumer