MFSA to assist Maltese financial services industry to benefit from EU membership

By Julian Manduca
The Malta Financial Services Authority will be taking a proactive approach to assist the Maltese financial services industry in the coming months.
In what must look like a spark of optimism in the current sea of economic gloom, MFSA Chairman Joe Bannister has outlined how EU membership will "bring important additional benefits to Malta’s economy and business." MFSA’s vision is to see the development of Malta’s financial services as one of the main pillars of the economy, along with tourism and manufacturing.
Over the coming months the MFSA will be setting in motion its ‘Agenda for Maltese Financial Services in Europe.’

The Agenda was developed in September of 2003, but has gone through some fine-tuning following discussions with stakeholders and was launched yesterday.
Making a point of how Ireland has benefited from membership, the MFSA is hoping Malta will follow suit. The incredible success story has come with some sacrifice, but the Irish economy now enjoys "a new generation of fast-growing export-driven Irish owned firms in industries such as agri-business, electronics, construction materials and paper."
While the MFSA points out that predictions about the present EU members suggest that these: "would gain a total of 10 billion euros over the long run, increasing their GDP by a one-time gain of 0.2 percent which could lead to the creation of an estimated 300,000 jobs," the predictions for accession countries is even more positive.
The MFSA quotes recent economic literature which states: "trade-induced simulations typically show that the (EU) applicants as a group gain anywhere from 1.5 percent to 8 percent or even 10 percent of GDP in the short to medium time."
The MFSA is confident that some of that gain will rub off on Malta, but there is a clear warning: "the costs associated with increased competition and adjustment may come sooner that the benefits in the early years of membership."
Nevertheless, the MFSA expects the long-term benefits can be very large, "if appropriate policies are followed."
According to MFSA’s Agenda, Malta’s integration into the EU’s financial markets will bring significant benefits to businesses, investors and consumers. An integrated financial sector will: "lower costs of capital; increase the global competitiveness of companies; help develop SME’s; drive down the cost of financial services for consumers; bring about an improvement in pensions; ensure higher returns for individual investors and provide more venture capital for innovation."
It is the MFSA’s intention to develop capabilities to assist the financial services industry, to "obtain access to EU resources such as project funding, networking opportunities, training and mobility programmes, innovation centres and information relay centres."
"The MFSA will also develop capabilities to assist start-ups and SME’s overcome bureaucracy and red tape, propose changes to administrative policies and deal with government authorities and EU structures and institutions on behalf of the industry."
The MFSA’s Agenda outlines the challenges and opportunities facing the Maltese Financial Services Industry of EU accession. The challenges are to bring about: "a change in market reality that will require a change in mindset to deal with the vastness of the single market," and Malta’s difficult to catch up with the currents of regulatory change that are driving the integration of the European market in financial services.
The MFSA sees opportunities through access to the European financial services market through the ‘single passport.’
"This means that a particular product licensed in the home member state would be automatically recognised in all other member states and may be sold across borders free of undue bureaucratic controls."
The Agenda also recognises that with the emergence of Information Communication Technology, new methods are being developed for the supply of financial services products with the consequence that location is becoming less important.
The launch of the Agenda, was also addressed by Finance and Economic Services Minister John Dalli, who said that the targets set out for the MFSA in 1994, including the attraction of financial services industry to Malta were being reached. Dalli emphasised the need for branding Malta as a centre for financial services.
In the second half of the launch Prof Bannister explained the structure, functions, and operations of the MFSA, and in a short discussion with the press the Parmalat and Priceclub cases were brought up.
Prof Bannister explained that the MFSA, while fully responsible for the regulation and monitoring of licensed entities such as banks and the stock exchange, was not responsible for the monitoring and regulation of the thousands of limited liability companies in Malta, which fall under the Companies Act.