The Malta Business Observer 31st January 2019

INTERVIEW

Issue 94

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Distributed with Times of Malta

January 31, 2019

Banking reform needs to reflect current business realities

Medserv CEO Karl Bartolo said the company’s first foray into South America through Suriname could serve as a showcase to attract the business of other oil producers in the area. see pages 5, 6 >

Martina Said The planned reform of Malta’s banking legislation is necessary to encourage and support business in Malta, particularly in light of the developments related to blockchain and cryptocurrency, according to leading financial services practitioners.

At the end of last year, CEO of the Malta Financial Services Authority (MFSA) Joseph Cuschieri said that a reform of the country’s banking legislation is needed in order to modernise Malta’s legal and regulatory framework, and a new banking strategy is in the works for 2019, along with a policy review that will address various challenges currently being faced by the sector.

Weighing in on this, Malcolm Mifsud, Partner at Mifsud & Mifsud Advocates, said that with the banking system that exists today, the most prevalent issues are those of accessibility, and the ability of the regulator to avoid another Satabank saga. “Many questions have arisen on how and why this was allowed to be under the regulator’s radar, and the failure of this bank has meant hardship for individuals and companies. It is important that the MFSA analyses whether such issues could be identified earlier and how the response could be faster to allow account holders to have their funds realised.”

“The main challenge that any corporate services provider faces is assisting clients to open bank accounts in Malta. We can incorporate a company within 24 hours; however, a bank account could take up to two months to be opened, making the company un-

NEWS Logistics companies welcome the rise in demand for goods and services, but worry about rising property prices and the shortfall in human resources. see pages 9, 13 >

NEWS able to function until the bank account is opened.”

Dr Mifsud added that the regulator was duty-bound to look into the issue of accessibility in order to allow a sensible balance between safeguarding compliance and making banking services available to corporate clients established in Malta. “Banks are now quoting the term ‘risk appetite’ to explain why they are limiting new clients to their bank,” he stated. “They have to decide with urgency whether they will support the cryptocurrency and blockchain industry in Malta. It would be useless for Government to legislate for the introduction of new sectors when the major banks fail to keep in step.

The situation seems to be unclear, and clarity is essential.”

“Business banking has become the greatest hurdle for the financial services industry in Malta.” – Karl Schranz, Director, E&S Group Karl Schranz, Director of E&S Group, echoed this concern on the position of the banking industry in relation to the introduction of legislation on blockchain and crypto assets, stating that the banking industry needed to be in a position to help, not hinder the growth of this industry.

“Malta needs a banking industry that supports its current business

reality. Business banking has become the greatest hurdle for the financial services industry in Malta due to banks becoming much more risk adverse. It is useless introducing new regulation, such as the Virtual Financial Assets Act, when banks are not willing to take on this business. This is why more banks Continued on page 3

A year on from its establishment, the Malta Development Bank (MDB) is filling the gap in the market that commercial banks could not address. see page 15 >

CASE STUDY Sparkasse Bank Malta plc has opened a new branch in Dublin, with the aim of tapping into the jurisdiction’s substantial and topperforming fund sector. see pages 20, 21 >

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Banking reform would require more skilled resources within the sector Continued from page 1 need to be attracted to Malta to be able to service such industries. We expect this industry to be the main growth driver, but it is dampened by the current market situation.”

Mark Curmi, Director of Banking at KPMG, said that a reform in Malta’s banking legislation would likely also include changes to the wider regulatory environment of the financial services industry, particularly in relation to innovative technologies, as well as within the MFSA itself.

“As a European country, Malta benefits from EU regulation, therefore our core financial services activities are all governed by EU legislation. My understanding of a reform here is the development of legislation and regulations, and the underlying legal structures for them which are currently not regulated through directives at European level.”

A reform of the industry’s wider regulatory environment will likely bring about greater cooperation between regulators and supervised entities, Mr Curmi added, which would therefore require more skilled resources within the sector.

“That said, an analysis of the industry will need to be conducted first, to understand what worked in the industry and what didn’t throughout the past years, followed by what Malta offers as a jurisdiction, the quality of service, the robustness of regulation and how competitively all this positions us,” he said. “Malta’s reputation has come into question recently, and therefore a concerted effort by stakeholders, players, regulators, Government and the public to protect Malta as a jurisdiction is crucial for the banking sector to continue to thrive.”

“We can incorporate a company within 24 hours; however, a bank account could take up to two months to be opened.” – Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates

THE OUTLOOK FOR MALTA’S FINANCIAL SERVICES INDUSTRY IN 2019 “Political events from the past few years have had their effect in 2018 and will continue to have a negative impact in 2019.

Malta cannot afford that serious allegations are not addressed and merely brushed off by explaining that wrongdoings, such as money laundering, take place in other financial services centres such as London, Frankfurt and Luxemburg. These centres have withstood time and are more resilient than we are.”

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates “The possibility of a slowdown of the world economy will also affect the financial services industry in Malta. However, as we have seen with the 2007 financial crisis, while certain sectors will suffer, Malta’s relatively cheap cost of doing business and standard of living, together with its attractive tax regime will attract players looking to reduce cost or to save tax.”

Karl Schranz, Director, E&S Group

“There will probably be a retained level of growth, but this will be dependent on the innovative approach Malta continues to take, as well as a continued effort among regulators, Government, stakeholders and players in the industry to continue on this path. Innovative technologies will prove to be both a challenge and an opportunity for the industry, whereby, in order for the island to remain a strong financial services centre, it needs to stay ahead of the curve with advanced, yet flexible, regulation for such emerging technologies. I expect to see an increased focus on Artificial Intelligence in 2019 – Malta is the first regulatory jurisdiction to be looking at regulating, supervising and certifying AI technology, which is a bold and novel move for the jurisdiction.”

Mark Curmi, Director of Banking, KPMG Malta

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INTERVIEW

Medserv to seek opportunities in South America with Suriname contract Marie-Claire Grima Malta-based company Medserv will be providing nearshore logistics support to Staatsolie Maatschappij Suriname, a fullyintegrated oil company, with the Republic of Suriname as its single shareholder, in a shore-base contract valued at $30.6 million (€26.9 million), for the next 15 months.

It’s a golden opportunity for the company, allowing it to make its first foray into South America, and put feelers out for other oil producers in the area which may be interested in its services.

“We operate dedicated bases in Malta, Cyprus, Egypt, United Arab Emirates (UAE), Oman and Iraq, and have a representative office in Libya, but South America is a new geographical market for us,” Medserv CEO Karl Bartolo told this newspaper. “Suriname has a population of just over half a million people, and less than 7 per cent of its territory is developed – the rest is forest. It is not a major oil producer as yet. They lift between 16,000 and 17,000 barrels a day.”

Medserv, which provides shorebased logistics services and supply chain management for oil country tubular goods (OCTG) to various international and national oil companies (IOCs and NOCs), will be managing the project in Suriname, through a dedicated Medserv team. “The industry is still in its infancy there, and as a result experience and industry ‘know-how’ are still limited,” Mr Bartolo explained.

“If this 10-well offshore drilling campaign results in a significant discovery, that would be a great leap, considering the economic size of the country.”

While Suriname already has all the infrastructure in place, Mr Bartolo said that the client engaged Medserv to provide the company with the experience and established proven quality systems that it is known for in the market. Not only does the company hope that oil companies which are already in

Suriname, such as Tullow and Apache, will be paying attention to Medserv’s work with Staatsolie Maatschappij, but also that neighbouring countries which have made significant oil discoveries, such as Guyana, will sit up and take notice of the services that the firm has to offer.

“Suriname has given us a good head start to this year and will stabilise our earnings, but it’s not yet a long-term contract, so we’ll see what happens after that. In the meantime, the team will be using it as a showcase to attract other oil and gas projects in South America – particularly neighbouring countries.

Meanwhile, Mexico liberalised its

market last year, which is something that is also of interest to us.”

Mr Bartolo mentioned how the regional expansion already experienced in the East Mediterranean may be replicated in South America, citing Cyprus as an example “We started out with one oil major.

Nowadays, we have contracts with the majority of the IOCs which have offshore projects in Cyprus. Furthermore, it catapulted us into Egypt and presented other prospects in the region.”

Discussing how the company has managed to make inroads in so many different markets, Mr Bartolo said that a company that is

trying to establish itself internationally will find it much more difficult to do so if the market it is trying to penetrate is already mature. “As I said, in markets like Suriname and Cyprus, the industry is young, and expertise and experience are still being cultivated.

Egypt on the other hand is a mature market; however, we were brought in to support and help refine their quality management processes and service. We brought an improvement in health and safety, service delivery, and response time. There must be an opportunity of some kind – an opportunity to add value.”

Another key to ensuring the success of an international project is to not think short-term, Mr Bartolo added. “You can’t just plan to make a quick return. You have to make sure you provide in-country value. The fact that we’ll be using local staff will have a multiplier effect on the local economy, generate in-country value and help us gain long-term acceptance.”

Last year, Medserv’s Directors Anthony Diacono and Anthony Duncan, the company’s major shareholders, announced that they were looking to sell their 65.5 per Continued on page 6

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January 31, 2019

INTERVIEW

“You have to make sure you provide in-country value” Continued from page 5 cent shareholding, with investors signalling their interest in acquiring it. “The process is still ongoing,” Mr Bartolo stated. “Anthony and Tony are of a certain age now, and it would be a good progression for Medserv to find a strategic partner that can help further its growth, now that it has become a truly international company with lots of opportunities on the horizon. It’s been a tough two years – many companies like us have gone bust. But our stakeholders and shareholders continued to support the company, and our team was very robust and resilient to those forces.”

“What also helped, in our case, is that Medserv placed itself in easy oil countries and where oil and gas

are of strategic importance for those countries’ economies. If our business was dependent on countries where cost of extraction is high, the projects would have possibly been abandoned and we would have had to shut down.

During the recent downturn we did slow down, but the volume we generated gave us enough breathing room to continue through this tough period. Now that the market is turning, and with the recent contracts that we’ve secured, we’re hoping to see more opportunities.”

Looking ahead, Medserv expects further expansion in Egypt and Lebanon, which Mr Bartolo said would be classified as ‘natural growth’. “The outlook for the Mediterranean and the Middle Eastern nations is positive as

more projects become active,” he added. “We’ve continued securing new contracts, and extending existing ones, and we’ve worked on a restructuring plan to put into action this year in Iraq. This will be effective by March.” Other incoming projects for Medserv include work in Uganda, and the company also sees significant potential in supply chain management for mill-to-well projects.

Mr Bartolo said that both earnings and revenue had increased between 2017 and 2018, and the improvement was expected to continue in 2019. “There’s a very promising growth period ahead, not just for this period, but at least for another three years. I can’t imagine a much better outlook than we have for the current year.”

KARL BARTOLO, CEO, MEDSERV

“If this 10-well offshore drilling campaign results in a significant discovery, that would be a great leap, considering the economic size of the country.”

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Rise in demand for goods and services buoyed logistics firms in 2018 Rebecca Anastasi Malta’s healthy domestic economy has been credited for an appreciable increase in revenue registered by leading companies in the logistics and shipping sector in 2018. The rise in the demand for goods and services, as a result of booming industries and greater spending power, has intensified the need for imports and exports, according to industry stakeholders, who expressed optimism these trends would be maintained in the year ahead.

Matthew Sullivan, the Director of Strategy, Development and Finance at Sullivan Shipping Agencies Ltd, underlined the concrete results experienced by the industry as a whole. “2018 was, overall, a positive year. The increase in

cargo was specifically due to the booming building industry, which required the shipment of materials such as bathrooms, tiles, furniture and fittings.” Furthermore, the importation of food and general household consumables was driven by the increase in population in recent years and the rise in the export of waste material.

“There was also an increased interest in the outsourcing of logistics services including warehousing, distribution and forwarding, commonly known as 3PL services,” he said.

While the container market saw a general rise of “approximately 10 per cent from that of the previous year (compared to an average annual increase of 3 per cent over the past five years),” there was an equivalent decrease in the number of trailers imported and exported to

the island, Mr Sullivan noted. “This shift from trailer to container cargo was mainly attributed to new and faster container services from Southern Europe and an increase in cargo from regions not directly connected by RORO services,” he said.

This includes shipments of tractors, buses and trucks, or oversized cargo loaded on special flatbeds or lowboy trailers. Mr Sullivan also highlighted the surge in revenues in airfreight which saw a rise “amounting to approximately 8 per cent (with an average annual increase of 3 per cent over the past five years) when compared to 2017.”

This buoyancy resulted in larger profit margins for many firms, Jimmy Cutajar, Managing Director of Global Freight Solutions (GFS) noted, saying that the firm experienced a “considerable increase in queries which landed

more clients in our portfolio” in 2018. Indeed, the company’s preliminary figures for the past 12 months, according to the Managing Director, show an approximate rise of 60 per cent compared to 2017 figures.

“The healthy economy Malta is experiencing means that more people have access to a better lifestyle, thus increasing the demand for goods and services. Malta, being a country with no natural resources, has to import the majority of its goods from overseas, hence the rise in demand for logistical services,” Mr Cutajar explained.

This was echoed by Edward Hili, Executive Director of Hili Company Ltd, which started operating in the Maltese market in late 2017 through its subsidiary, Mariner Shipping. The firm saw “a strong demand for transport serv-

ices from our clients throughout the year,” Mr Hili said, noting the increase in the import market as a result of “the high level of economic activity and growth registered in recent years” which has “driven domestic consumption and investment.”

Positive results were also reported by Simon Mifsud, Managing Director of S Mifsud & Sons Ltd, the shipping arm of SMS Group of Companies, who gave credit to the re-introduction of a ferry service operated by Italian shipping company Tirrenia linking Malta to Sicily and the mainland, after a 30-year absence, to the success of 2018. “The superior service offered by the firm, with our client focus, helped us achieve and beat very ambitious Continued on page 13

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e Malta Business Observer is Malta’s leading business newspaper distributed with Times of Malta every month.

Managing Editor Marie-Claire Grima

EDITORIAL

e reputation economy The President of the Malta Chamber of Commerce, Enterprise and Industry, Frank V. Farrugia, recently penned a talking point for the Times of Malta, focusing on the upcoming MEP elections. “The central question we want to see taking centre-stage in this campaign is how can we contribute towards a better European Union? How can we make a difference and address the challenges faced by the political bloc?” Mr Farrugia wrote.

“We must be mindful of the fact that, in a globally-connected scenario, the world is watching. Anything we do and say is likely to be picked up and will raise our country’s profile in the global stage or used to hurt Malta’s reputation with the obvious negative repercussions.”

The last point is certainly worth mulling over. Instead of seeing any real effort to fix the problems that have emerged in the past few years, Malta’s reputation in various areas continued to take a hammering in 2018. Let’s take banking, to start with. Malta’s banking sector has been plagued by scandals, from Pilatus to Satabank, and as illustrated in our cover story, is in urgent need of reform at a fundamental level. Our jurisdiction’s good name needs to be safeguarded, especially as the international situation gets increasingly complicated. The authorities really need to get their act together to prevent the sector’s lethal combination of bureaucracy and mismanagement from having an even more negative impact on business in Malta.

The infamous golden visa scheme has continued to make things even more complicated for the sector. A European Commission report on the sale of passports, released on January 23rd, warned that Malta and Cyprus’s investor citizenship schemes expose the rest of the EU to money-laundering risks. “They are the lone EU members on a blacklist maintained by the OECD, a group of mostly rich nations, of countries whose ‘golden passport’ schemes make tax evasion easy,” a scathing article in The Economist said. Banking reforms may be implemented, but what will they be worth, if Malta is somehow being perceived as acting as a possible washing machine for illicit money, leaning all too confidently on its membership of the EU? Even Malta’s golden goose, the iGaming industry, could be imperilled, if Malta doesn’t take definitive action against being used as a hub for dirty money. In November, Enrico Bradamante, Chairman of Malta-

based gaming lobbying group iGen, warned there was increased need for the authorities to tighten regulation and ensure the negative perception of Malta as a money-laundering island, especially in the international press, was given due attention. He insisted that urgent measures had to be taken to combat Malta’s reputation, which was growing increasingly squalid. The iGaming industry accounts for around 12 per cent of GDP in Malta, and thousands of jobs for Maltese nationals as well as foreign residents. But it’s still relatively young, and there are plenty of challengers within the EU angling for a slice of the pie. If Malta loses its reputation as a safe, stable, profitable hub for gaming, what will there be left for the industry here?

Malta also suffered another blow when it plummeted five spots on Transparency International’s annual corruption perception index, placing at a record low, and fell from 19th best for quality of life to 38th in the Expat Insider 2018 report, with many expats feeling uneasy about the political situation and stability, and extremely worried about corruption at all levels of society. Corruption is a loaded word, locally, but when it’s highlighted by people who haven’t been mired in the funk of Maltese politics their whole life, it becomes increasingly obvious that something is wrong. Expats and foreign workers have become Malta’s lifeblood, fuelling the engine of its economy. If Malta is being perceived as a possibly corrupt and unpleasant place to live, the already tight pool of talent from which employers must find staff will continue to get shallower, and the economy could stagnate.

Is that what it will take to bring about a complete change in culture?

Journalist and PR guru Patrick J. O’Brien wrote that in the current reputation economy, “your reputation defines how people see you and what they will do for you.” With all the data that we feed our digital devices and networks daily, this is certainly worth giving due consideration to on a personal level. But we should also be mindful of what it means for the country as a whole, and ask ourselves some tough questions. The economy may be doing well in the traditional sense of the word, but when it comes to the reputation economy, we need to make sure we’re not left out of pocket. We can’t shoot the messenger for highlighting our shortcomings – we have to tackle our problems at the root and do something about them. After all, the world is watching.

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BUSINESS OPINION

On a quest to reinvent the GRTU

Paul Abela

Last year, the General Retailers and Traders Union (GRTU) turned 70 years old. The organisation I have been heading as President for 15 years has a very colourful history. It was always at the forefront to protect the interests of businesses, and we are well known for not shying away from challenges.

A few years ago we appointed a new, young, female CEO – Abigail Mamo – and that was the first step taken by GRTU to reinvent itself. This does not mean that we are changing all that we are, but we are certainly taking stock of who we are and balancing that with who we want to be.

In short, we are keeping the good and bringing in more of that, because we want to stand out and excel.

GRTU is made up of its traditional sectors, which are retail, petrol stations, gas distributors, VRT stations, cargo hauliers, pharmacies and more. We have quite recently also welcomed new sectors that we are also very proud to represent, such as childcare centres, milk distributors, web developers, gaming, and consultancy firms.

Among the recent benefits GRTU has delivered to its members are advancements in conditions and rates of return for petrol stations, childcare centres and milk distributors. We have worked on securing the livelihood of businesses hit hard by the Satabank crisis, which have managed to remain afloat and stayed in Malta to continue their business here. We have established the true one-stop-shop for business in Malta – Business 1st – in collaboration with Malta Enterprise. At the end of 2018, GRTU also held the biggest Black Friday show ever in Malta, aimed at encouraging consumers to focus on the Maltese retail businesses. This year’s Black Friday was the best day of business recorded locally.

GRTU also offers a wealth of information for businesses. We hold weekly sessions to educate, consult or inform businesses on a wide variety of topics that are of

interest to them. These focus on newly-introduced laws, existing regulation, as well as alliances with the private sector that encourage B2B collaboration.

GRTU has also worked and will continue working on the biggest challenge facing all businesses today – scarcity of human resources. Finding prospective employees is a headache, and this does not apply exclusively to specific sectors or people with the right skills, but to any post

that needs to be filled, from the lowest to the highest levels.

Businesses are spending exorbitant funds in recruitment and training. A fast-growing economy, as the one we have, coupled with full employment, is leading to high staff turnover and wage inflations, both at the expense of productivity. Work with Identity Malta and Jobsplus has ameliorated the system of employment of non-EU nationals, a necessary resource our

“GRTU has also worked and will continue working on the biggest challenge facing all businesses today – scarcity of human resources. Finding prospective employees is a headache, and this does not apply exclusively to specific sectors or people with the right skills, but to any post that needs to be filled, from the lowest to the highest levels.”

country needs to tap into, but much more work is needed.

At GRTU there is never a dull moment. We are always kept busy with our routine work of supplying information, holding events and carrying out studies, as well as dealing with the day-to-day issues that crop up and need urgent attention. In business, every day is an important day, because the employees’ wages need to be guaranteed on a daily basis and one day of not operating can cost a business a number of its clients.

At GRTU we are aware of this and we are fast to act.

We are a vibrant organisation and in 2019 we will be undergoing rebranding of our organisation.

Internally GRTU has gone through many changes and we want an exterior that reflects that, and a brand that our clients will naturally relate to and identify with. A studied approach will determine the best course of action.

This will be followed by the actual rebranding, executed by professionals in the field, and a marketing campaign to get our brand out there. This is a project that we are all very excited about, that will continue strengthening our organisation and launching it into the future.

Paul Abela is the President of the GRTU.

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Concerns remain over property prices, human resources shortfall for 2019 Continued from page 9 targets, carrying over 13,000 trailers over the past 12 months alone.”

Moreover, the increased efficiency of the logistics industry – with reduced transit times and the consolidation of a reliable service – has also led to peace of mind for many importers, according to Mr Mifsud, who explained that this has led to suppliers being able to purchase in smaller quantities and still meet their targets. As a result, groupage – a cheaper and faster form of freight which sees cargo for different consignees grouped in one container or truck – has gained traction against more traditional modes of shipment, the Managing Director said.

While the outlook for 2019 is highly positive, with individual firms shoring up operations, and the development of more commercial centres and retail outlets expected to push figures up even further, this year will not be without its challenges, the company leaders warned. The increase in property prices is a particular cause for concern. Indeed, property, Sullivan Shipping’s Mr Sullivan noted, “has risen to such an extent that, at current market prices, it would be difficult to get adequate returns from the

investment in land for warehousing services.” Higher property prices push rates up across the board, meaning that “although there is an increase in the demand for freight or warehousing services, we are not always able to meet our customers’ require-

ments with feasible solutions. This increase in costs is also further reducing our competitiveness in offering international logistics solutions,” Mr Sullivan stressed.

GFS’s Managing Director Mr Cutajar said that the human resources shortfall, which

is being experienced across a number of sectors, required urgent addressing.

“Malta’s employment supply market is saturated across most of the economy sectors.

This has resulted in some increased stress for the local industry as one would have to look for foreign employees to sustain the growth,” he said. Adding to this, Hili Company Ltd’s Mr Hili pointed to the consequent rise in salaries, calling it “the biggest challenge in our industry”, though he noted the encouraging impetus by those commanding higher wages to push the envelope, “to become more efficient and create additional services for clients.”

Mr Hili also noted that Malta’s strong economic performance was a doubleedged sword since “the solid performance of our economy over the last few years was driven primarily by the iGaming and financial services,” which, in turn, helped to drive real estate speculation. “Naturally, there are question marks as to how sustainable this state of affairs is and whether it should remain the way forward. It would be wise if the development of new economic activities in the near future builds on the positive trend experienced in recent years,” he concluded.

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MDB proves value to Maltese economy after just one year of work Marie-Claire Grima Just over a year after the establishment of the Malta Development Bank (MDB), it is already clear that the bank is filling a gap in the market which was being sorely felt by businesses in Malta, according to economist Rose Marie Azzopardi, a member of the MDB’s Board of Directors.

“In just one year, the market has shown that there was a significant need for this type of bank in Malta.

Similar to most national development banks, the focus is on the potential of small-to-medium enterprises (SMEs) – which form the biggest proportion of local business units, including family businesses – and also on infrastructural projects, particularly those with a social dimension, such as education, health and affordable housing,” Dr Azzopardi told this newspaper.

Dr Azzopardi said the first year of the bank – which like most other national development banks

ROSE MARIE AZZOPARDI, DIRECTOR, MALTA DEVELOPMENT BANK

around the world, is owned and guaranteed by Government – had been a busy and exciting one. “The bank has employed a good team of top management professionals, it has held consultation meetings with stakeholders, attended promotional activities, and is collaborating with local financial institutions in order to provide the best service to the local economy, by identifying potential funding gaps and designing appropriate financial instruments to address them. Consultations have not only been held with local financial entities, but also with regional ones, such as the European Investment Bank, KfW and the Council of Europe Development Bank, in connection with long-term loans at attractive rates which the bank can be provided with for social projects and SMEs.” With a mission statement that includes supporting entrepreneurship and socio-economic development in Malta, the MDB’s highlights in 2018 included signing a Memorandum of Understanding with Malta Enterprise and Malta Industrial Parks Ltd in April, with the aim of assisting businesses of all sizes and from all sectors in raising financing and qualifying for a business loan, as well as signing a Risk Sharing Agreement with BOV and with the Family Business Office in October, focusing on the transfer of family businesses, with the local bank offering a specialised scheme specifically for family businesses, for which the MDB will act as a guarantor.

Following the launch of the family business scheme, Dr Azzopardi said that the bank is working on several others, and assessing the viability of a number of projects that it has been presented with. In the coming year, it is expected to conclude agreements on joint programmes

THE MALTA DEVELOPMENT BANK BOARD OF DIRECTORS

with commercial banks on guarantee schemes for SMEs, and a soft loan scheme for further education, in collaboration with the Managing Authority for EU Funds.

Since the focus of the bank is on SMEs and large infrastructural projects which have an important national or regional development dimension, Dr Azzopardi insisted that the MDB’s actions are not aimed at crowding out or competing with the private sector, but rather to step in when there are market failures. Indeed, Prof Josef Bonnici, Chairman of the MDB, had stated in an interview in 2018 that it is estimated that Malta risks losing between €2.3 billion and €3.1 billion in potential new investment over the course of five years due to market failure.

“Market failure is when the free market is not being efficient in the allocation of resources. This can result in investment gaps due to insufficient collateral, the long

gestation period of projects which necessitates very long-term borrowing, projects which are huge, or the perception of higher risks associated with a particular innovative project,” Dr Azzopardi explained.

“Market failures can happen in any economy. Hence, the bank will be primarily engaged in second-tier operations; in other words, indirect financing through facilities or schemes intermediated via financial intermediaries, ensuring the non-competitive nature of the MDB. The bank can also engage in first-tier operations (direct lending and co-financing) of bankable projects where there can also be market failures, utilising five main facilities, specifically loans, guarantees, equity participations, underwriting and advisory services.”

Given that market failures can also lead to a loss in societal welfare, the MDB is intent on ensuring that viable investment projects benefit Maltese society, Dr Az-

zopardi added. “Such projects can derive both from the public and private sectors, can include the upgrading of skills or technology, can involve innovative products, can deal with the development of infrastructure, and can be linked to different types of community services, or deal with efficiency and sustainability of the green and blue economies.”

Finally, Dr Azzopardi said that the bank will continue to develop its business model, to negotiate agreements with private financial institutions and to develop its products and services. “The MDB has a wide mandate, which is expected to provide it with more flexibility, and with a reduction in credit risk due to the potential diversification of its loan portfolios.

The MDB is only one year old, but I think that it will prove to be an important vehicle for the continued socio-economic development of the Maltese islands.”

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RECRUITMENT

CAROLINE MUSCAT, ASSISTANT RECRUITMENT MANAGER, KONNEKT

A case for con legal professio Caroline Muscat

“The ultimate advantage for professionals who would have dedicated the time to grasp the details of such new concepts is a dedication towards a more holistic approach within their practice, coupled with an enhanced possibility of changing areas of specialisation.”

It is common knowledge for whoever undertakes the path of the accountancy or legal profession that you are entering a lifetime of study and development. The everchanging body of laws and introduction of new International Financial Reporting Standards (IFRS) make it impossible for either lawyers or accountants to remain static if they are truly passionate about the profession.

The advantage that the accountancy profession provides is that the warrant to practice is conditional in relation to the number of hours dedicated per year to continuous development. The legal profession, on the other hand, does not impose any hours of attendance to continuous development programmes. There are several arguments both for and against having this imposition, which, without a doubt, have and are being discussed in other forums.

Whether there is an actual requirement for continuous development or otherwise does not detract from the obvious assertion that it is impossible to be truly effective and efficient in either profession without taking the necessary steps to stay updated in relation to major, as well as minor, industry changes.

Notwithstanding the attendance to information sessions, there is a clear difference between skimming the surface of any topic as opposed to delving deeper in the understanding of the intricate

complexities of any new introduction. While it is relatively easy for accountants and lawyers to obtain an idea of new incentives introduced under Maltese law, it is less common to find those who dedicate enough time to obtain a proper grasp of such new incentives to be confident in such areas.

Having said that, it is not humanly possible to be an expert on all aspects, even if one were to focus solely on the financial services industry, for example.

Some might argue that it is better to simply “have an idea of the subject” than nothing at all, and that the time constraints faced by both legal and accountancy professionals makes it extremely difficult to obtain a better and more practical understanding of certain things which a person would not be actively practising in their day-to-day work. However, the benefits of a holistic understanding of the main changes in other areas outside one’s practice areas certainly outweigh any negatives in the equation – mainly time restraints.

The main benefit of this is clear when one is seeking new employment within a different area of expertise. From a recruitment perspective, we feel the pain points of both employers seeking to recruit, as well as candidates seeking new challenges. Although it is predominantly a candidate-driven market, when it comes to specialised areas, the initiative to obtain specialised knowledge needs to precede the expectation. From the employers’ end, a level of flexibility is required, particularly in emerging markets, as well as the commitment to invest in further training for employees.

The primary recent example which comes to mind is the scrambling towards the introduction of the Regulation (EU) 2016/679 – the much-discussed General Data Protection Regulation, or GDPR. Of course, there couldn’t be a situation where professionals had obtained prior practical experience, since this was a new regulation. However, there was certainly an opportunity to develop or, rather, start developing an expertise in the area, primarily by understanding more than just the main concept.

We have experienced a situation, and have heard of other experiences, where professionals operating in the area were very eager to take on the advisory side of this new regulation with the ultimate aim of aligning businesses to the requirements of GDPR. This is undoubtedly an obvious business approach which saw main players in this area set up whole departments to cater for the influx of requests.

That is all well and good, and it is

certainly an approach which is required in order to make sure other businesses put their mind at rest that they will be fully compliant.

Unfortunately, this did not always work out as planned.

From time immemorial, the main reason for seeking legal and accounting advice is to entrust a situation in the hands of a professional who will in turn adopt a practical approach in order to ensure business continuity with minimal disruption, and ensure that clients feel they are in safe hands.

This concept of safety is, unfortunately, sometimes underestimated, yet of paramount importance. If the professional you have entrusted an issue to does not inspire trust, or does not deliver to the level expected, it is unlikely that there will be a return on investment in the aspect of returning

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ntinuous financial and onal development

business or even referrals. More often than not, the primary complaint is that while professionals would have acquired the knowledge from a theoretical perspective, there is little effort in those practical elements which make an enormous difference to clients. A proper understanding from a practical perspective undoubtedly takes more time as it involves the full comprehension of your client’s needs, as well as ensuring that the professional development has been thorough and has not just skimmed the surface.

A similar example is the area of blockchain and cryptocurrencies.

There is a general consensus that there are some areas within blockchain which are quite vague.

The developments within this area are yet to be seen due to the upcoming regulations. Yet there is a

lot of information to be obtained which can give rise to a number of opportunities for further personal development.

From a recruitment perspective, we often encounter candidates who seek to find employment within new and upcoming areas, as well as clients needing to engage professionals willing to develop within these areas. This is definitely something we encourage, and gives a lot of hope to businesses seeking to develop and expand in these areas. There are also great results when potential candidates do more than simply skim the surface of such new developing areas of practice.

While experience in the area the employer is seeking to recruit for is definitely an asset, there are different experiences and areas of expertise which are more easily

transferable to one another. More importantly, where one can show that – notwithstanding practising in a particular area – a certain amount of in-depth training was undertaken, it will ensure that the transition to a different area of expertise is smoother for all concerned.

The ultimate advantage for professionals who would have dedicated the time to grasping the details of such new concepts is a dedication towards a more holistic approach within their practice, coupled with an enhanced possibility of changing areas of specialisation and truly undertaking the path to becoming experts within that area. Transferable skills are also to be taken into consideration, which would mean that any continuous development efforts need to be carefully considered.

We cannot have a situation where

“It is impossible to be truly effective and efficient in either profession without taking the necessary steps to stay updated in relation to major, as well as minor, industry changes.” such development is undertaken at random, without it being well thought out, yet still have the expectation of transitioning easily.

Whether we are considering the situation within the accountancy profession where a certain number of hours are required or within the legal profession, where such development is not regulated or en-

forced, it needs to be conducive to the individual’s development in order to ensure that there is a thorough understanding of the practical aspects and is not solely limited to theoretical exposure.

Visit Konnekt.com or email Caroline at caroline@konnekt.com for finance and legal career opportunities.

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Changing the way real estate is sold in Malta Jo Caruana Kevin Buttigieg and Jeff Buttigieg, Chairman and COO of RE/MAX Malta respectively, believe that, with the imminent introduction of real estate regulations, combined with the company’s own Customer Service Charter, the real estate landscape in Malta is soon to experience a transition period. They believe it will go from a predominantly direct-fromowner market to a more agency-centric market, where property sales by real estate agencies will increase to over 75 per cent in the next two-to-three years.

“To begin with, 50 per cent or more of the population still buy direct from the owner.

If you consider that RE/MAX accounts for a great percentage of estate agents in Malta, our influence can be instrumental. In North America and many European countries, 90 per cent of sales go through an agent and we are now seeing local numbers increase in line with that,” Jeff Buttigieg said. “We believe those results will be down to the service that an estate agent can offer, and we are at the very forefront of that.” Indeed, a recent study confirms that those who do not use an agency in Malta at the moment would consider using one if the agency was more professional, more knowledgeable of the market, properly trained, and cared about their customers’ needs.

When RE/MAX Malta opened in April 2004 with just three agents and the directors as its team, it was impossible to know that it would grow into a company with 31 franchisees and hundreds of team members, making it the sector leader in the real estate business in Malta. Now, the leaders behind the company say it is time to make changes that will ensure RE/MAX can keep growing and keep setting standards.

“We started small but always had big ideas for where RE/MAX was going locally,” explained Kevin Buttigieg. “We grew very quickly and that was absolutely fantastic for a number of reasons, but it has also highlighted some weaknesses within the com-

“is new move will roll out a number of truly innovative approaches within the sector and revolutionise the way we do business. I believe no one will be able to match us in the years to come.” – Jeff Buttigieg, COO, RE/MAX Malta

KEVIN AND JEFF BUTTIGIEG, CHAIRMAN AND COO OF RE/MAX MALTA

pany structure. Now we’re turning a family company into a uniquely professional one, which is immensely positive. That is exactly why we recently embarked on a transformative process that my brother, Jeff, has been leading for the past few months, so that we can consolidate what we have currently and reset the standards of the real estate sector into the future.”

Jeff Buttigieg said that as RE/MAX Malta is already always a step ahead of local competition, innovation has to be at the helm of everything the organisation does. “Thus, this new move will roll out a number of truly in-

novative approaches within the sector and revolutionise the way we do business. I believe no one will be able to match us in the years to come.”

To this end, RE/MAX Malta has engaged top-level professionals to help with this process – including industry consultants, as well as their own franchise owners and managers. Together they have studied existing structures and practices, and have paved the way to building a new strategy for the whole company to use in its operations.

One of the key aspects of this process is the creation of the RE/MAX Customer Service

Charter, and works are already well underway. “This means that we are integrating our values into everything that we do, and our code of ethics is going to be a very important part of the business moving forward because we believe the company needs to go back to basics,” the COO explained.

“We have grown exponentially, and our administration couldn’t quite cope with that growth. We can be very objective, and know that some things were allowed to slip, some service standards were not adhered to across the board, and certain brand guidelines were not strictly followed. This is the time to rectify that and we are doing it in a big way.”

“As a result of this charter, the whole RE/MAX Malta network – including our franchisees – will speak the same language,” Kevin Buttigieg added. “After all, when you grow so quickly, it’s hard to keep specific standards in place while everything is changing around you so rapidly. So now, everything will reflect the way things must be done – from top to bottom and bottom to top; from the way we operate to the way we make decisions. I believe our services standards will soon be second to none.”

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A lot of research has already gone into this process, while more will be conducted in the weeks to come. “We recently held indepth focus groups with top-performing members of our team, for instance, to discover more about their processes and habits. We wanted to learn everything about the way they work – from how they approach clients to the way they close a deal. These individuals are incredibly accomplished in their fields and we want to learn from them, but also to ensure that our standards are being met at every stage.”

“Beyond that, we are also surveying clients who came to RE/MAX when searching for property but didn’t end up buying from us. We want to know why, and we want to make sure that, next time, any skills and training gaps are filled.”

With that in mind, RE/MAX Malta has already put a number of processes in place, including a 15-day induction course for new recruits. “We believe this starts them off on the right foot – by covering everything from dealing with buyers, sellers and notaries, to communication and soft skills. Thanks to the combined experience of our three real estate academy managers, we have created a holistic programme, using an approach that we trust will make a major difference to the final product.”

The company is also changing its technology approach by launching a new state-of-the-art property management system with integrated performance management technology. It has been built in-line with its Customer Service Charter

“As a result of this charter, the whole RE/MAX Malta network – including our franchisees – will speak the same language.” – Kevin Buttigieg, Chairman, RE/MAX Malta so the company can ensure high standards across the board.

The Chairman said that RE/MAX Malta’s new approach started to be rolled out as of 1st January this year, and is all-encompassing across the pillars of the restructuring process, including the company’s operating model, franchise governance, service standards, brand building, engagement and staff development, digital and performance management.

“The process is happening now and will take about six-to-18 months to complete, with lots of elements coming together during this period to provide a genuinely wellrounded result. We’re very excited about those results and what this will mean for the future standards of real estate in Malta,” he concluded.

JEFF BUTTIGIEG

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CASE STUDY

PAUL MIFSUD, MANAGING DIRECTOR, SPARKASSE BANK MALTA. PHOTOS: ALAN CARVILLE

Sparkasse Bank opens Dublin branch after being granted Ireland licence Rebecca Anastasi

“Ireland was a natural choice for the bank due to its membership of the EU and its English-speaking environment.”

Sparkasse Bank Malta plc has recently been granted a licence to provide depository services to funds established in Ireland and has opened a branch in Dublin, with the aim of tapping into the jurisdiction’s substantial fund sector, which is one of the world’s best-performing.

Managing Director Paul Mifsud said the bank’s licence will enable it to prioritise “actively seeking new business from Ireland, which boasts a fund sector north of €3 trillion, compared to Malta’s €9 billion.” Ireland’s competitive market is characterised by the strong presence of behemoths in the industry, with more likely to base themselves in the Irish capital once Britain leaves the European Union.

“The establishment of our branch in Dublin is a positive addition to our product offering, for our customers and for staff in general,” Mr Mifsud told this newspaper.

“We believe new opportunities will arise as the branch gathers repute and business in Ireland. Moreover, the new branch, which will be centrally located, shall feature as a direct business line within the bank’s organisational structure and will be considered as a direct profit centre.”

The decision to open depository functions in Ireland was taken in

2017, according to the Managing Director, in order “to explore the possibility of emulating the bank’s local model in other jurisdictions which lend themselves to international business and the fund sector.”

“Ireland was a natural choice for the bank due to its membership of the EU and its Englishspeaking environment. The bank had already established relationships and contacts with several service providers in Ireland which made the move and the decision all the more feasible,” Mr Mifsud explained.

Acquiring a licence in Ireland did not come without its challenges. Mr Mifsud noted the strict policies and processes the bank had to adhere to, the rigorous criteria it needed to meet, as well as internal governance matters which had to be addressed to secure and embed the branch well into the bank’s governance. “Fortunately, Sparkasse was able to rely on a great team of experts assisting it, as well as the regulators, both local and in Ireland, who were extremely responsive,” Mr Mifsud said.

Moving forward, the team in Ireland – entrusted with the management of relationships, depository functions, and the outlet – includes professionals with years of experience. Donncha Morrissey, who joined in August from CITI Bank, will be the Head of Branch while Eileen McCarroll

has joined as Head of Depository from financial services technology solutions provider SS&C. Recruitment for other roles and responsibilities is still ongoing, with the plan to offer new work opportunities in Dublin to staff currently working locally. “This will be conducive to knowledgesharing, culture-spreading and staff retention within the firm,” Mr Mifsud emphasised.

This expansion in operations comes off the back of “the strongest year on record both in terms of revenues and profitability” for Sparkasse Bank Malta, the Managing Director asserted. He credited the development of “a business model focusing on customer service and seamless connectivity between banking, investment and custody services” for some of the bank’s increase in revenue, as well as its having “built on its strengths” throughout the financial year.

“As a result, today, Sparkasse Bank is the second-largest noncore domestic bank on the island. The bank has built its business in Malta organically since its establishment in 2000 and is a significant player in the custody and depository space.

We have achieved all this by being clear in our vision and focused on our core services,” he stated.

This was no small feat, according to the Managing Director, due to the increasing challenges

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faced by the banking sector.

“Ever since the financial crisis, the banking environment has been, and will remain, a very challenging one within which to operate.” In his view, this is due to international regulatory changes, such as the implementation of the new MiFID II legislative framework; the PSD2 directive, which regulates payment services and payment service providers throughout the European Union, resulting in infrastructural IT challenges; and GDPR, which has forced firms to rethink the way they collect and use data. “All these – and many more – were introduced within the same year and required a high level of resources to fulfil,” Mr Mifsud said.

Other issues continue to affect the bank, including the “heightened requirement in governance standards and additional regulatory reporting” as well as “the prolonged period of negative interest rates in the eurozone” which, in his opinion, “will drive banks to re-think their revenue model.”

However, while these challenges will “continue to prevail in the foreseeable future,” forcing a review of “risk appetites and the alignment of customer data bases and service offerings,” Mr Mifsud is optimistic. He emphasised that

2018’s confident results were “a trend we wish to sustain in the coming years as we continue to focus on our core model and competences” and he underlined the potential for further sustainable growth.

Indeed, the bank’s priorities in 2019 reflect this, and have been put into place in order to “strengthen the business in Malta by continuing to support the fund industry and corporate service providers locally,” Mr Mifsud explained. He underlined the bank’s commitment to investing in human resources, IT infrastructure and new technologies to ensure that it is able to carry out its functions efficiently. “The bank’s priority, in this respect, is to make sure that it has robust and sufficient resources at all times to support its business and regulatory obligations,” he stressed.

With Brexit on the horizon, Mr Mifsud emphasised that while the UK’s departure from the bloc might have an impact on asset managers seeking passporting rights into Britain, and British professionals who provide services to local structures, the bank “is well-placed” for it and, indeed sees potential advantages for the new branch in Ireland.

“Sparkasse’s counterparts are

“Ever since the financial crisis, the banking environment has been, and will remain, a very challenging one within which to operate.” mainly situated within continental Europe, and the bank will now also be focusing on broadening relationships in Ireland,” he specified.

Concluding, Mr Mifsud tied the strength of the bank’s future success to Malta’s healthy economy, expressing his faith in Malta’s ability to maintain buoyancy in the markets. “A strong economy must be realised in a prolonged and sustainable manner. The country has to preserve its business appeal from a costvalue perspective and kudos.”

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STOCK MARKET REVIEW

e rights issue “e share capital of a company consists of the issued number of shares forming part of the authorised number of shares of the company. ”

Doreanne Caruana A company that requires additional capital, be it for growth or for regulatory purposes, will often turn on its shareholders for that funding – either because other sources may be more expensive, or because it is not allowed to do otherwise in terms of regulation (especially with licensed institutions such as banks), or because it wants to keep a healthy balance between its debt and equity proportions.

Preemption rights – the right to be offered the first option in a transaction – afforded to shareholders in our Companies Act require that if a company wishes to increase its share capital, the company needs to make an offer to its shareholders for them to be able to participate in the increase in shares. Why is such a right important? With preemption rights, the company is bound to offer the new shares first to the existing shareholders, and then to anyone else, should the existing shareholders not wish to take up their entitlement of the new shares. This gives the existing shareholders the option of buying more shares, to avoid the dilution of their existing shares.

For the company to be allowed to issue new shares immediately to new shareholders, the existing shareholders, in a general meet-

ing, will need to resolve to allow the company to do so. Therefore, in terms of the preemption right of shareholders, when a company wishes to increase its share capital through the issue of new shares, it would typically go for a rights issue. As the name implies, depending on the number of shares that an existing shareholder holds, they will have a right to acquire new shares in the company in proportion to their existing holding.

Thus, if a shareholder holds 5 per cent in a company, it will be entitled to 5 per cent of the new shares.

The entitlement of each shareholder is typically disclosed in a purposely drawn-up document known as the prospectus, as the number of new shares entitled for a number of shares held – for ex-

ample five new shares for every 20 shares already held.

The company issuing the new shares needs to have the ability to do so in terms of ‘balance’ of authorised but unissued shares. The share capital of a company consists of the issued number of shares forming part of the authorised number of shares of the company. In essence, the company would typically have a number of authorised shares (which is the maximum amount of shares that can be in issue at any point in time) and from that authorised amount of shares, it would have a number of issued shares (the shares that have been allotted as paid up share capital to the company’s shareholders). The issued shares can never be more than the authorised shares and as such, before a

company proceeds to launch a rights issue, it needs to ensure it has enough balance of authorised and unissued shares for this corporate action. If the balance of authorised unissued shares is not enough for this corporate action, then the company needs to call a general meeting to seek approval from its shareholders to increase the authorised share capital and thus create the necessary balance.

The process with a rights issue of listed entities in Malta would commence with the preparation of a prospectus, which will be addressed primarily to its shareholders, giving them an overview of the company, its business, the risks related to the company and its financial status.

The prospectus will also include the price of the rights. In pricing the new

shares, the board of directors of the company would need to consider the nominal value of the shares – this is a level below which a company may never issue its shares for – and the value of the shares of the company on the secondary market.

Pricing the new shares at a premium to the market value of the shares on the secondary market would not make the offer attractive, as investors would go to the secondary market to purchase shares at a lower price than that offered to them via the rights issue exercise.

Once the prospectus is approved by the competent authority within the Malta Financial Services Authority (MFSA) and the necessary company announcements are made, the company sends out a copy of the rights issue prospectus and an application pack to the shareholders as at the record date.

Shareholders on the company’s register of members as at the record date would be eligible to participate in the rights issue. This date is set by the company and is typically announced in the same announceContinued on page 24

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Understanding one’s rights and obligations ahead of acquiring shares Continued from page 23 ment that the company publishes on the submission of an application to the MFSA for the approval of the prospectus and the admissibility to listing of the new shares subject to the rights issue.

The application pack that is sent out to shareholders would include what are known as provisional allotment letters (PALs), allowing existing shareholders a number of options in relation to the rights assigned to him/her. Perhaps the most straightforward right is that of acceptance of all the rights assigned to the shareholder. This form will simply require a shareholder to sign and return to their preferred financial intermediary from a list included in the prospectus, along with the payment for the shares being acquired. This particular PAL is not transferable – if a shareholder wishes to ‘pass on’ the right to the shares to someone else, in full or in part, the other form(s) would apply. The other

PAL allows the existing shareholder to either take up part of the entitled shares or assigns part or all of the entitlement to someone else. If a shareholder wishes to transfer part of all the entitlement to another investor, there will be space in the PAL which would allow for such transfer. It would then be up to the incoming investor to pay up for the new shares being transferred to them.

Any rights to the new shares which are either not taken up by the existing shareholder nor transferred to someone else, are known as ‘lapsed rights’. What is commonly seen when the rights issue is large is that the existing shareholders who take up their full entitlement of the rights are allowed to make a provisional application (typically in the same PAL where they apply for their full rights) for any lapsed rights available. Another option available is to have an underwriter for the lapsed rights – someone who steps in and takes up any balance (or preagreed amounts from the balance)

of lapsed rights. Underwriters are typically either banks or majority shareholders of the company.

Lapsed rights may also be made available to financial intermediaries to subscribe for the new shares either for their own trading account or on behalf of clients or funds.

What is notable with lapsed rights is the possibility of there being a bidding process – the rights for the new shares are priced in the prospectus; however, the lapsed rights may be subject to a bidding process.

Those applying for lapsed rights may do so competitively at a price which is at least the price of the rights but can be higher, thus ensuring a better chance of acquiring the new shares if the price is higher than that of other bidders.

The company has the obligation under the Listing Rules to distribute any premium obtained in the lapsed rights bidding process to the non-accepting shareholders to whom those lapsed rights relate.

This only applies where the pre-

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, “Rizzo Farrugia”, is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. Rizzo Farrugia, its directors, the author of this report, other employees or Rizzo Farrugia on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither Rizzo Farrugia, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2019 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.

mium per non-accepting shareholder equates to amounts of €5 and over.

All shareholders, as the company’s owners, partake in all risks and rewards attached to that shareholding. It is therefore very important for shareholders to un-

derstand the rights and obligations pertaining to their shareholding in companies ahead of acquiring and owning shares.

Doreanne Caruana is a Corporate Advisory Executive at Rizzo, Farrugia & Co (Stockbrokers) Limited.

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Calamatta Cuschieri completes 20 capital market transactions over the last four years

Award-winning HSBCnet internet banking for businesses revamped Over the past few months, HSBC Malta has been rolling out a better user experience through its award-winning internet banking for business customers, HSBCnet. The focus will be to introduce a customerfriendly interface and functions that are designed to offer efficiency, convenience, and control.

HSBCnet helps businesses stay in control of their everyday banking needs such as payment of bills and salaries, transferring funds, and viewing account balances at any time and from anywhere around the globe.

The intuitive design means that customers can access all their accounts in one place, including both HSBC and non-HSBC accounts in Malta or overseas, and manage balances and transactions 24 hours a day.

Other notable options include the ability to set up Euro and foreign-currency payments and manage trade activity.

Further to account management, HSBCnet provides a number of data and reporting tools. Users are able to generate and view financial reports online or import files to their

in-house systems for reconciliation. HSBCnet Get Rate allows users to view and instantly book foreign exchange rates for priority payments and inter-account transfers. The entire range of functions on HSBCnet’s website is similarly available on HSBCnet Mobile app, which also features the latest in mobile innovations such as TouchID and FaceID. HSBCnet is available to all HSBC Malta Commercial Banking customers.

More information can be found on www.business.hsbc.com.mt/HSBCnet or 2380 8000.

Over the past years, Calamatta Cuschieri has helped various businesses grow and thrive by assisting them in raising funds or listing through the capital markets. In fact, over the last four years, the Calamatta Cuschieri Capital Markets team has been involved in 20 transactions by both local and international companies. Calamatta Cuschieri’s roles included the role of sponsoring broker, corporate advisor or even manager and agent to transactions that ranged from issuing of bonds, take-overs or dematerialisation, listing, and agent-forming part of a capital markets transaction.

These companies are varied in size and in the sectors they operate in, and range from real estate, hospitality and manufacturing to pharmaceutical and the retail sector.

Darin Pace, Head of Capital Markets said, “Calamatta Cuschieri’s Capital Markets team assists local and international clients with all types of corporate market transactions and related services. Our team has built up the relevant experience through the completion of a number of diverse deals over the last couple of years.”

He added that the capital markets offering includes main market, Prospects multilateral-trading facility (MTF) as well as the Institutional Financial Securities Market

(IFSM) – all operated via the Malta Stock Exchange (MSE).

The main market is the official list of the MSE and equities, funds and bonds can be listed on this list. Prospects MTF provides financing for small and medium-sized enterprises (SMEs) and through this vehicle, such companies can raise capital by issuing bonds or shares. The IFSM is specifically designed for the institutional investors and is regulated by the MSE under the Wholesale Securities Market list-ing rules.

Calamatta Cuschieri’s Capital Markets team offers various services which include IPO and bond issues, corporate advisory for Prospects MTF, listing agency for IFSM, agency services, as well as acting as sponsors for the listing of funds on the official list of the MSE. Looking ahead, Mr Pace said, “2019 promises to be a record year for Calamatta Cuschieri Capital Markets team with a good number of transactions expected to take place during the course of the year.”

For more information email capitalmarkets@cc.com.mt, call 2568 8688 or visit www.cc.com.mt/capitalmarkets Calamatta Cuschieri Investment Services Ltd is licensed by the Malta Financial Services authority and is a member of the Malta Stock Exchange.

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Personnel expansion and infrastructural upgrade show PLO’s commitment to excellent service Economical, punctual and effective, Port Logistics Operations (PLO) has left no stone unturned to deliver fast, efficient and value for money services to their clients.

Through meticulous research of specific client needs, capacity requirements and the right equipment, PLO has become a leader in local and offshore waters conveyance operations.

PLO provides an array of conveyance services. These include delivery of provisions, transportation of lubrication oil in drums, effecting crew changes and personnel transfers, delivering ship spare parts, transport medical supplies and personnel, delivering port services, providing garbage disposal, as well as support services for the movie industry, transfers of mooring masters

and cargo samplings. With a fleet that is the largest in Malta, Port Logistics Operations has what it takes to provide an excellent, round the clock service. Apart from having local certification, PLO’s larger vessels are classed and insured to sail in international waters.

Through a carefully thought out expansion in its personnel and an extensive upgrade in its infrastructure, Port Logistics Operations is well-equipped to deliver.

Port Logistics Operations official Capt. Noel Galea, emphasised the organisation’s pursuit of excellence.

“Our commitment is to intensify our endeavours to raise the bar continually and challenge ourselves to do better. We are confident that this will keep us in sync with industry needs and the success of our clients.”

Digital opportunities must be embraced in order to thrive Carm Cachia The digitisation of the economy is one of the most important drivers behind the profound transformation of the labour market and the way people work, with this digitisation thought likely to become even more significant in the years to come. The concept of digitisation covers a wide range of different technologies, ranging from computers and mobile devices, to the internet and the Internet of Things (IoT), to robotics and automation, which all have different implications in terms of their impacts on production and work.

The demand for digital skills is clearly related to the role of the worker. A recent EU study indicated that in some job categories, more than 90 per cent of roles require specific types of digital skills, particularly for high and medium-skilled roles. 90 per cent of EU employers state that managers, professionals, technicians, clerical workers, sales or skilled agricultural workers are required to possess at least basic digital skills. Like all EU

countries, industry, Government and NGOs in Malta must embrace all the opportunities presented to them for up-skilling in further digitisation and emerging technologies in AI, blockchain, IoT, robotics and other business tools, in order to thrive.

Carm Cachia is the Executive Coordinator and CEO of the eSkills Malta Foundation.

Turkish Airlines wins three corporate travel awards Turkish Airlines has won three 2018 GT Tested Reader Survey awards by Global Traveler magazine, including the first-ever award for “Best Corporate Travel Program for Business Travelers” for its prestigious Turkish Airlines Corporate Club programme. In addition, the global airline was awarded “Best Airline for Business Travelers” and “Best Airport Staff/Gate Agents” for the second consecutive year.

The survey polled more than 22,000 frequent business and luxury flyers to name the best in more than 80 travel-related categories.

“At Turkish Airlines, we place a premium on the value of our business and corporate travellers.

Many of the hallmarks of Turkish Airlines’ award-winning services are developed with a long-term vision of creating a seamless door-to-door experience for our business and corporate travellers, and these awards are a true testa-

ment of our customer-first philosophy,” said Mert Dorman, Turkish Airlines SVP Corporate Marketing and Distribution Channels. “We thank our passengers, Corporate Club members and Global Traveler magazine for recognising our award-winning product and services.”

Turkish Airlines Corporate Club offers one of the world’s most extensive corporate frequent-flyer programmes. There is no fee to join and no commitments. Members receive benefits such as exclusive upfront discounts, special baggage allowances, flexibility of changes/cancellations without penalty, free tickets, upgrades and access to passenger lounges.

Turkish Airlines flies to more than 300 destinations in 124 countries on five continents, and connects 17 cities in the Americas to more than 40 countries that are less than three hours from Istanbul.

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e Malta Business OBSERVER

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January 31, 2019

BUSINESS UPDATES

Transaction monitoring is a key component of AML compliance Nowadays, it has become mandatory for compliance teams to think about regulation in a holistic way, and to find improved methods of managing the vast amount of transactional data being collected each day.

Organisations must comply with Anti-Money Laundering (AML) rules, with the main purpose of detecting and reporting suspicious activity. This is effectively achieved through the use of an AML transaction monitoring solution. By monitoring and analysing cash deposits, withdrawals, and wire transfers, AML transaction-monitoring software can provide the compliance team with a complete view into a customer’s profile, risk levels, and predicted future activity.

The need for a holistic approach There is a growing focus on monitoring every transaction, which leads to the importance of adopting a broad-based approach to-

wards dealing with business risk.

Organisations need to be able to identify potentially unusual financial transactions which might subsequently prove to be suspicious within the context of existing anti-money laundering regulations. The mapping of these data points is critical for a full picture of the client’s profile, their commercial activities, private wealth distribution, and management structure.

Although many organisations have implemented robust and costly Know Your Customer (KYC) solutions, the problem often remains in the identification of suspicious transactions. This tends to involve submitting large amounts of alerts, many of which are false positives, without any form of analysis. Consequently, compliance teams are flooded with information which reveals very little intelligence. Therefore, KYC cannot simply be a random data grab if it is to provide any

meaningful identification of suspicious behaviour. Rather, a suitable KYC solution requires intelligent transaction monitoring of a client’s activities, with the appropriate analysis necessary to create a holistic view of financial behaviour.

An effective AML transaction monitoring solution is a powerful compliance tool for financial transaction analysis. It eliminates unnecessary manual work, minimises the likelihood of missing critical information, and assists organisations in maintaining a compliant profile.

AXON AML transaction monitoring The AXON transaction monitoring solution helps organisations detect suspicious behaviour quickly and effectively. It optimises transaction monitoring by automating processes in order to minimise unnecessary alerts, while also offering real-time track-

ing and reporting functionality.

With AXON, compliance teams become more accurate and efficient in their monitoring of potentially fraudulent behaviour.

Visit www.computimesoftware. com or email info@computimesoftware. com to learn more about AXON and how it can help your business remain AML-compliant.