The strength of our financial services sector lies in our people, perseverance, robust regulation, innovation and a global mindset, says Bruno L’ecuyer.
[attach id=296603 size="medium"]Bruno L’ecuyer. Photo: Darrin Zammit Lupi[/attach]
The first floor offices at the Malta Stock Exchange in Valletta afford a bird’s-eye view of the Grand Harbour. The view is bigger than what it represents, because as a historic gateway, it holds the promise of Europe and the world beyond the horizon.
It is apt then that Bruno L’ecuyer, head of business development at Finance Malta, talks of a global perspective when discussing Malta’s economy and, specifically, its financial services sector.
“Having a global mindset means that we can now venture beyond Europe and look towards other continents, with a strong value proposition able to make and nurture new relationships,” he says.
Malta’s financial services sector is young – and yet, it has achieved maturity relatively quickly.
“Malta doesn’t have a long history in financial services. As with former British colonies, in the 1980s our only experience was in offshore finance. Moreover, Malta can be considered to be a hybrid model, with both civil and common law being applied, which is a rare competitive advantage in this sector.
“Then in the 1990s, there was a change in government, and one of the new administration’s key goals was EU accession. Preparation began in earnest, including the shift from offshore to onshore finance. In this respect, a number of key pieces of legislation were developed, government and industry worked hand in hand to align our financial legislation with that of the EU.
“When Malta joined the EU in May 2004, the necessary legislation was in place to allow Malta’s financial services sector to operate,” Mr L’ecuyer says.
Since then, Malta’s economy has undergone various changes. Manufacturing, for instance, is no longer the backbone of the economy, but has moved up the value chain.
“Since 2004, financial services has enjoyed double digit growth year on year,” says Mr L’ecuyer. “It is a growth that has been achieved thanks to constant consultation between the overnment, the Opposition and industry practitioners with a long-term vision for a sustainable sector employing local people.’’
“Just consider that 18 years ago, Malta only had two funds and one fund administrator. Today, we have around 600 funds, some 27 fund administrators and around 70 fund managers who manage €70bn in funds both within Malta but also outside of Malta. Nowadays, financial services directly contribute around eight per cent to GDP, which is perfectly in line with our European neighbours.
In much the same way that the economy is diversified, so does our sector focus on various services such as wealth management, investment funds, banking and insurance
“That is very healthy, not only because it is a testament to the quality of services on offer by Malta, but it also means that Malta’s economy enjoys a good level of diversification, thus not being wholly dependent on financial services. Moreover, it is this healthy contribution to the economy which provided us with a safeguard during the 2008 financial crisis because sectors like financial services continued to perform well and thereby supporting other sectors, such as tourism, which suffered a direct hit.
“In much the same way that the economy is diversified, so does our sector focus on various services such as wealth management, funds and insurance,” Mr L’ecuyer adds.
“Additionally, for us, financial services is not a numbers game. Our aim is to attract quality investors who set up business in Malta, invest in office space, hold regular board meetings on the island and employ Maltese. Indirectly, financial services also support travel, restaurants, hotels, real estate and shopping. In fact, we need to start measuring the indirect contribution of financial services. To do this, a collective effort involving other players, such as the National Statistics Office and the Central Bank, is needed.”
For those who are not aware of all the backstage action and preparation, the growth of local financial services may come as a surprise. For Mr L’ecuyer, this growth is also sustained by two precious resources.
“First of all, we have the lifestyle. Malta has so much history and culture and is a safe, pleasant destination.
“Then there are the people. The Maltese are perseverant and that gives us an edge. Also, the educational system supports us by adapting to our needs. This enables the sector to employ locals and therefore keep the cost of doing business in Malta down. Maltese people are also keen to work abroad – however, most of them return with valuable skills and experience which Malta can make good use of.”
Malta has other qualities which are sustaining the sector.
“We are very nimble in our approach – for instance, we are reactive to market conditions and transpose EU directives very quickly to our legislation something other member states find difficult to do given their size.”
Currently, Malta acts as a regional financial centre servicing the Euromed area. What next?
“As our financial services sector matures, we can start developing the right skills to cater for very specific services, generally only on offer in larger centres such as London or Dublin,’’ says Mr L’ecuyer.
“In the past four years we have ventured beyond Europe to South Africa, the Middle East and even the Far East. We are also looking at North Africa and South America, where we are making diplomatic headways and building the right profile. That is all part of the preparatory work needed to strengthen our financial services offering.
“As the world emerges from this deep recession, the deepest since the great depression of the 1930s, Europe, and importantly Malta needs to be ready to capitalise on the opportunities the new economy will offer, and I believe that with a global mindset we can benefit from the rewards that a more interconnected world will offer.”