Malta’s financial services may be the victim of its own unprecedented growth and evolution...

The lack of awareness of the rapidly changing financial solutions available means practitioners may not be nimble enough to offer the most effective solutions to clients, the managing director of Alter Domus Chris Casapinta warned.

“The Maltese jurisdiction is growing so fast, with so many new products being introduced that practitioners might not even have time to keep up with the exciting options they could offer their clients,” he said.

“Take securitisation vehicles. Do we have practitioners with enough experience and exposure to propose them? It is useless having new laws and regulations unless you understand when they might be valuable tools for your clients.”

Securitisation has been a buzz word in Malta for almost eight years, offering an alternative – or complement – to bank financing.

But recent legislation introduced the concept of ‘securitisation cells’, which mean there is no contagion of liabilities between the different cells owns by investors.

“It is one of the first structures of its kind available in Europe, so there is naturally considerable interest, especially for investors interested in asset classes like real estate and shipping, which give an annuity,” he said.

The ‘first mover’ advantage that such innovative legislation provides cannot be underestimated, particularly since Malta has to compete against long-established jurisdictions like Luxembourg and Ireland, he stressed.

Another area where Malta has held its own, in spite of competition, is in the fund management business

Another area where Malta has held its own, in spite of competition, is in the fund management business. Malta, like other European member states, introduced the Alternative Investments Fund Manager Directive (AIFMD) in 2013.

But unlike other countries, it retained its ‘professional investor’ regime, which has attracted considerable attention from clients.

Another exciting area he believes has untapped potential is family offices – private companies that manage investments and trusts for a single family or group of families.

“These are very attractive as most of their clients are private high net worth individuals. I think in general we are improving and we are meeting their expectations... But I think we need to go a step further and exceed their expectations. Obviously, it will take a few years to improve our infrastructure and facilities,” he said.

However, when he talks about infrastructure it is not only better roads that he is talking about: he also means banks and related wealth management services.

“I know that we already have dozens of banks but we need big international names that are aimed at international clients, offering the full spectrum of wealth management services like portfolio management, special credit lines for special investments and private investments.

“Naturally we need to make a big distinction between how we serve retail clients, which we need to continue doing, and high net worth individuals who need more bespoke services.

“We are trying to attract some banks to operate in Malta. It is not easy as they need large investments to move from one location to another and the market may not be big enough to guarantee a positive cost-benefit analysis.

“But we have to be aware that there is a time window of around three years, in my opinion, as we cannot be the ‘new kids on the block’ for too long. We need to move on to the next step.”

Mr Casapinta explained that Identity Malta, to a certain extent, has already addressed the need to offer a different environment to high net worth individuals by moving to the Mediterranean Conference Centre.

“At least those applying for citizenship get a good first impression. Applying for residence at Evans Building is not the best way to attract people to Malta,” he said.

The problem is that the country has to blow its own trumpet, and Mr Casapinta believes that organisations like Finance Malta cannot do this on their own.

“Organisations like Finance Malta have limited budgets so private business and professionals should contribute so that the industry as a whole grows. And it does not only need to be financially. For example, Alter Domus continuously sends experts in securitisation and fund management, to pass on knowledge gained over the past 20 years,” he said.

Alter Domus started operating in Luxembourg in 2003, founded by two former partners at PwC. It grew rapidly and now has 28 offices and desks across four continents, offering the expertise of more than 800 experienced professionals. Its clients include eight of the 10 largest private equity houses and six of the 10 largest real estate firms in the world.

Apart from retaining people in Malta and attracting non-Maltese, we should also look for Maltese people who have specialised overseas and bring them back to Malta, even if they are close to or past retirement

Mr Casapinta was working in Luxembourg and saw the opportunity to open Alter Domus in Malta. He set up as a one-man office in 2010 but by 2012 he already had 10 staff and has 75 today.

“We outgrew our premises and are operating from three places at the moment, which is not efficient. We will be moving to new offices in Mrieħel in early July, bringing everyone under one roof.

The new offices can take 150 people so there is room to double our current workforce. And I am quite optimistic that we will manage to do that by end 2016,” he said.

Being part of such a global entity has no doubt contributed to the stellar growth, as Alter Domus refers clients to Malta from its overseas offices – and the local office does the rest.

“We have a very healthy pipeline and some large fund managers who are looking at Malta. We cannot guarantee that they will act but, taking our past as a benchmark, we should be able to confirm them in the coming months. And that will change the landscape locally.”

The problems with such rapid growth go well beyond finding the right offices. Alter Domus, like so many other companies in the financial services sphere, is also looking for suitable recruits.

“We will be looking at recruiting mainly accountants or people from banking and finance, basically people who are number driven.

But we obviously also need support from compliance and regulatory experts, apart from others.”

Resources can be an issue so we need to think about this, not just as Alter Domus but also the industry. Although we should be retraining a number of Malta, we also need to look out of Malta.

“Our clients are international and communication can be better for foreigners. And also when it comes to technical expertise, the finance industry can be very specific so recruiting people specialised on asset classes like real estate and private equity or hedge funds, can be a challenge in Malta,” he said.

He believes that there are enough compelling reasons from foreigners to come here, ranging from the attractive tax rate for highly qualified professionals to the safe environment for families.

“Apart from retraining people in Malta and attracting non-Maltese, we should also look for Maltese people who have specialised overseas and bring them back to Malta, even if they are close to or past retirement.

“They still have a lot to offer, even as non-executive directors, or as consultants and mentors.”