There is a prime opportunity to market Malta’s lifestyle offering to fund professionals and their families amid growing discontent with high business costs in London and complaints that life in Switzerland is dull.
That is the belief of many practitioners in Malta’s fledgling industry who say fund managers should be made more aware of non-existent commuting on the island, high standard schooling, and a rich culture.
Lifestyle in jurisdictions has increasingly come under the spotlight in recent weeks, particularly as London sees funds emigrate to more tax-efficient jurisdictions in the wake of the recently introduced 50 per cent top tax rate which is severely denting City fund managers’ take-home packages. But now some Swiss-based managers are complaining of boredom outside working hours.
The disgruntlement in London made the front page of the Financial Times on Tuesday: Michael Farmer, manager of the $1 billion Red Kite metals fund, said hedge funds should accept higher taxes as part of doing business with London and stop threatening to relocate. But the FT said the Conservative party donor was almost a lone voice in coming to the City’s defence with an argument for citizens’ duty to pay dues as the country faced tough times.
FT writer James Mackintosh in London said several of the city’s best known managers privately say tax and tightening regulation were seriously hampering London’s position, particularly funds’ ability to attract top talent.
Mackintosh highlights how two of London’s biggest hedge funds Brevan Howard and BlueCrest have moved their headquarters to Switzerland, while Malta was attracting smaller funds.
On March 4, the FT turned its focus on Malta and the increasingly favourable light in which London’s largest hedge fund managers were viewing the island on account of cost-competitiveness and less intrusive regulation.
Now Malta’s industry sources say the island had a lifestyle trump card to play as the moves out of London could be coupled with growing disenchantment with Switzerland.
Chris Bond, HSBC Malta’s head of global banking and markets, highlighted Malta’s lifestyle offering at International Fund Investment’s interactive webcast earlier this month. He told The Times Business the lifestyle “should be promoted as one of the great advantages of doing business and living in Malta”.
“Malta has done an excellent job in positioning itself as a growing and compelling financial hub,” Mr Bond said. “Apart from the favourable conditions, Malta offers an excellent lifestyle.
“As an expat, I can certainly attest to the benefits. Here you can work extremely hard while achieving a better work-life balance. We should never underestimate the benefits of English being spoken as a first language and an excellent English-based education system and world-class healthcare. There are areas which can be improved, but the positive aspects significantly outweigh the negative.”
Andrew Frankish, director of IDS Fund Services Malta Ltd, moved to the island from South Africa a year ago and says he has yet to be bored.
“The commuting time to and from the office is all but non-existent,” he added. “The island offers a remarkable variety of things to keep one busy – especially in summer when something happens every week. The people are friendly, and the bustle through village centres with sidewalk cafés and eateries makes for a variety of experiences. Who wouldn’t want that way of life?”
Mr Frankish said Malta had lived up to expectations with most things available at reasonable rates. He pointed out he had not experienced safety like that in Malta “in a long time”.
He would readily recommend life on the island: Malta was not for people who had to have the fast-paced lifestyle of a big city, but there was more than enough to do whether starting a career or settling down and starting a family.
Ramona Piscopo, tax partner at PiscoPartners, which has an office in Sliema and in Zurich, said that while Malta’s attractive tax regime was often the driver behind managers’ decisions to relocate, their families’ well-being was also taken into account before they took the plunge. It was important the holistic ‘Malta package’ was marketed to them.
“There is a substantial difference between what London has to offer and what Malta has to offer,” Dr Piscopo pointed out. “When it comes to after-work leisure such as theatre and night life, London has much more available. Malta is also very rich in culture, outdoor activities like sailing and the fact that the sun shines the majority of the time is a bonus that can only be wished for in London.”
Dr Piscopo admitted some services like public transport, roads, and customer service were still lacking quality but they could be upgraded. The creation of facilities like golf courses and other sport infrastructure, more art galleries and concerts would help boost the Malta diary.
Technically, she added, all managers needed was a computer, phone, internet access, and, depending on the strategy, a cluster of services around them. London and New York were favoured so highly because of the cluster effects.
“Malta clearly isn’t yet a cluster but if it plays it right on all these angles it could become one,” Dr Piscopo stressed.
In the FT, Mr Farmer mentioned life in Baar, a village in the canton of Zug, largely an agricultural area with 21,000 inhabitants. Dr Piscopo appreciated people could consider there was “little to do” there.
The French-speaking canton of Geneva was very different to the German-speaking canton of Zürich, both in terms of culture, leisure activities and style, Dr Piscopo, who has lived in both regions, pointed out.
“Managers moving to Switzerland can choose between the different cultures and lifestyles that the cantons have to offer. The bigger cities have many extra-curricular activities and winter sports in ski resorts close by are also an attraction. The rankings about quality of life in cities often put Zürich and Geneva in the top three worldwide,” she said.
Simon Tortell, managing director of Valletta law firm Simon Tortell and Associates, emphasised it was a question of what people were used to.
“I wouldn’t change my lifestyle in Malta today for life in London, unless I had to live there and then I wouldn’t probably change that for this,” he argued. “I don’t think we should place too much emphasis on lifestyle, except for commuting time, which is minor here and really makes a difference. Malta is starting to have what it takes and we should however emphasise more frequently what a good system of education we have. Young managers will only move if their children will get good schooling.”
Dr Tortell said that just this week he had met a young manager with two children who is currently based in Ireland. He thought Malta was “great” but accessibility by air had to be improved. Dr Tortell said he had a point. As a constant traveller, getting to any fund destination in Europe other than London and Frankfurt took the best part of a day.
Lifestyle aside, Dr Tortell believed there was another opportunity for Malta to take – tapping its potential to evolve into the ‘manager jurisdiction’.
While Luxembourg was renowned as the ‘custody’ jurisdiction and Ireland the hub for administrators, there was no other tax-efficient jurisdiction which could claim to be the ‘manager’ capital of Europe.
“London and Switzerland – the latter more tax-efficient than the former – are the two manager jurisdictions,” Dr Tortell continued. “UCITS IV, with the master-feeder structure, appears to require a ‘manager’ jurisdiction, because with that structure you need one manager for both. With UCITS IV, the manager can passport elsewhere.
“The manager needs a head office jurisdiction, preferably tax-efficient for the company and its employees to passport services into other jurisdictions within the EU. It was announced that Malta will charge tax on ‘investment services professionals’ at 15 per cent. Can Malta emulate London and Switzerland? Does it have to?”
Dr Tortell deems Malta’s credentials were satisfactory but more human resources were essential for the island to compete. If the talent pool expanded as professionals learned the business, the number of managers coming to Malta would no doubt teach them what they should be doing.
The Maltese had another attribute. They were fast learners.