Foreign direct investment suffered a blow last year when Deutsche Bank withdrew more than €2 billion from Malta, although the move will not have an impact on the economy.
The stock of foreign direct investment [FDI] in Malta last year dropped by almost 25 per cent, or €3 billion, according to the latest data published by the National Statistics Office.
The NSO said the drop – to €9.6 billion from €12.6 billion – was the result of declines in equity capital, mainly from entities involved in financial and insurance activities.
A Malta Financial Services Authority official, who preferred to remain anonymous, told Times of Malta the drop was mainly the result of Deutsche Bank’s decision to withdraw a massive amount of money it was holding in Malta.
“Deutsche Bank [which holds a Maltese licence] last year withdrew more than €2 billion in equity it had in Malta to put it to better use.
“Although this had no direct impact on the Maltese economy – as the money was just parked in Malta – this is the main reason behind the massive fall in Malta’s total foreign direct investment stocks,” the official said.
According to the sources, other foreign banks holding a Maltese licence followed suit, but their effect on Maltese foreign direct investment stocks was negligible and could not be compared to that of the German bank.
While the money was not being used in the economy, “the sudden decrease in FDI is not positive and may leave an impact on the perception of foreigners about Malta’s economy as a whole, even though there is no necessary direct link,” the MFSA official said.
According to the NSO, more than 70 per cent of the €9.6 billion stock of FDI in Malta at the end of last year originated from financial and insurance enterprises.
“There was a net decrease of €1.6 billion in FDI flows, while the corresponding period in 2012 showed an increase of €100 million,” the NSO said in its statement.
On the other hand, during 2013, direct investment by Maltese-registered enterprises abroad was estimated at €1.1 billion, of which €600 million was invested in EU member states.
Compared with 2012, the amount of Maltese investment abroad was unchanged.