Prospects that Malta’s lucrative financial industry would benefit from Brexit continued to dampen yesterday as worldwide UK insurer Hiscox announced it will not continue with talks to relocate to Malta as it has decided to move to Luxembourg.
Hiscox’s announcement is the second major decision affecting Malta’s financial industry in the last weeks following a similar announcement by Lloyds of London to rule out Malta, opting for Brussels instead. Although both companies have officially stayed away from the Panama scandal involving the top echelons of the Maltese government when giving their decision not to choose Malta, various financial practitioners said that “the harm has been done and we are now feeling the pinch”.
Read: Lloyds rules out Malta for subsidiary outside UK
“Unfortunately in the past weeks we have been receiving many queries about what is going on. Concern is a reality and there are already many examples in our industry where we have lost business to other jurisdictions particularly Luxembourg and Ireland,” said Andrew Zammit, managing Partner of GVZH advocates.
“The problem is that Malta has started to be doubted on certain important aspects – particularly stability and trust – and so investors are moving to more solid ground,” Dr Zammit, who is a council member of the Institute of Financial Services Practitioners, said.
A spokesman for another top firm in the industry, who didn’t wish to be named due to ethical reasons said the local financial services industry was at risk of being demolished.
“The perception that the main institutions of the country are not working is harming our credibility and trust abroad and we are going to have to work hard to rebuild confidence,” he said. “The atmosphere created is reaching a level that it demoralises our pride in our country. This cannot go on and we have to go back to when we managed to put Malta on the international map a few years ago,” he said.
Hiscox’s decision has taken local financial services practitioners with surprise.
Last February, the company reported it was in talks with Maltese regulators – particularly the MFSA – and its chairman Robert Childs said that from a business point of view “both Malta and Luxembourg look to be the best” location to relocate to after Brexit.
The company yesterday said that while it had opted for Luxembourg, “Malta and Luxembourg both have a strong, pro-business position, and strong and well-respected regulator. However, Luxembourg’s proximity to our major markets clinched the deal in their favour.”
Hiscox, which underwrites a range of risks from oil refineries to kidnappings, expects to begin the process of incorporating the legal entity in the first half of 2017, so that it could write new business using a new base before the end of 2018.
Last January, after saying that Malta was in pole position for its post-Brexit relocation, the prestigious Lloyds announced a sudden change in direction.
Inga Beale, Lloyd’s chief executive said that after discussions in Malta it had been decided that the island “was not the right location”.
“We are such a global business that we felt that it was wrong. It was more likely to be somewhere on the continent,” she told a meeting in Davos without mentioning the Panama affair.
A few days later, Lloyds officially said that it was going to move to Brussels instead of Malta.
The news had surprised top officials of the MFSA who had already told the government that the relocation of Lloyds “was almost a done deal”.
Malta is currently under international pressure to explain the involvement of top government officials in the Panama Papers.
Prime Minister Joseph Muscat, currently the EU Council president and his chief of staff, Keith Schembri, have been invited to give their explanations to MEPs in Strasbourg next week.
ivan.camilleri@timesofmalta.com