Malta emerged as the favourite location for a post-Brexit subsidiary of insurance firm Lloyds of London, sources said.

Lloyds made it clear some months ago it wanted to open an office in another EU member state as soon as British Prime Minister Theresa May set Article 50 in motion to negotiate Brexit – meant to be by the end of March.

Lloyds chief executive Inga Beale had originally said the company was considering Dublin, Paris and Frankfurt, but by October, she said Malta and Luxembourg had been added to the list.

The sources said Lloyds had sent a delegation to Malta last month, as a result of which the island was put in pole position.

Lloyds intends to keep its 328-year-old base in London but will most likely move its top management to the new subsidiary, which will have to be capitalised separately, running into tens of millions of euros. The other – clearly more costly – option would be to have a branch in each of the member states, a possibility believed to have been all but ruled out.

The issue is passporting, that is, having the ability to conduct business from one jurisdiction in all the other member states. Passporting rights represent around four per cent of the company’s total premiums.

“The impact on Malta of hosting such a prestigious brand cannot be underestimated. It would be a game-changer in terms of attracting other big names,” the sources said.