INTERVIEW
Issue 64
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November 17, 2016
Distributed with Times of Malta
The Malta Stock Exchange has launched a consultation on its proposed strategy for capital markets. Chairman Joe Portelli explains why this is necessary if Malta is to futureproof the financial services industry. see pages 10 and 11 >
INTERVIEW With the Air Malta sale on the brink of failure and the MHRA complaining about losing hotel market share to unlicensed accommodation, Malta Tourism Authority Paul Bugeja has had a busy two years. see pages 5 and 6 >
‘Successful’ trip to secure correspondent banking Vanessa Macdonald
The recent visit to the US by the Prime Minister and Finance Minister in an attempt to secure correspondent banking services for local banks has been described as a “success” by the latter, although no details were given. “Minister Scicluna considers that the visit to which you refer was a success, in each and every aspect, not just regarding correspondent banking. Since all discussions are of a commercial nature, details cannot be divulged at present, but will be made public in due course,” a ministry spokesman said. The Office of the Prime Minister did not acknowledge the questions sent. Correspondent banking is the lifeblood of the banking system, enabling crossborder transactions for multiple currencies. However, the increasingly onerous regulatory environment has made several correspondent banks rethink the provision of services as the risk and additional compliance required was making the whole system unfeasible. However, as correspondent banks pulled out of smaller countries, the situa-
COMMENT tion became so critical that the Financial Action Task Force (FATF) issued guidelines in June 2015, clarifying the application of the risk-based approach to correspondent banking relationships, and confirming that they were not required to conduct customer due diligence “on each individual customer of their respondent institutions’ customers”. Sources said that HSBC Malta was covered by the group’s own correspondent banking but that this service could not be extended to third parties. Most other banks in Malta originally had more than one correspondent bank but since the amount traded in dollars is only $50 billion a year, many of the providers found that the fees
“e relationship depends very much on Deutsche Bank’s future”
collected did not justify this risk once the regulatory environment tightened. The solution was for each bank to reduce the number of correspondent banks it used, but this left them with “all their eggs in one basket”, the sources explained, referring in particular to Bank of Valletta which now depends heavily on Deutsche Bank. This means the relationship depends very much on Deutsche Bank’s future and on whether it decides to pull out of the US, where it is in the midst of negotiations with the US Department of Justice over a settlement for its alleged mis-selling of toxic mortgage securities. However, as Edward Rizzo commented (see pages 18 and 19), speculation that the Presidentelect could ease regulation on banks sent bank shares soaring: Deutsche Bank was among the best performers last week with a share price rise of 20 per cent. The sources said that it was good news that the Finance Minister was optimistic that a solution was in the offing, but warned: “We will be lucky to get one bank committed to working with Malta. There is not really going to be any alternative to having all your eggs in one basket.”
Why shouldn’t Malta become the centre for Islamic finance in the EU? Various stakeholders see this as a golden opportunity for Malta: so why isn’t the government leading by example and issuing a sukuk? see page 8 >
CASE STUDY Reducing bureaucracy has been on the cards for years and Malta Enterprise chief operating office Marika Tonna decided the time had come to do something about it. The first step: abolishing trade licences. see pages 12 and 13 >
e Business OBSERVER
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November 17, 2016
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NEWS
Qualifications Centre sees high overseas demand The Malta Qualifications Recognition Information Centre (MQRIC) is getting around three times as many queries from overseas as from Malta – a complete reversal of the situation a year earlier. In 2010, the situation was dramatically different, with queries about 6,400 qualifications from 1,560 Maltese citizens and only 648 foreigners. By 2015, the situation had already changed and the centre processed queries from 1,300 Maltese applicants and 2,249 foreign applicants. This trend was further pronounced in 2016 with the ratio of Maltese to foreign users of MQRIC services almost reaching 1:3. The head of the centre, Stefan Sant, believes that this is due to the user-friendly website and database set up last year, which allows students, employees and employers to check whether a particular qualification is recognised within the European Qualifications Framework. Since Malta is part of the framework, it can provide recognition and comparability of both academic and vocational qualifications, as well as offering advice on both local and international qualifications. The centre was previously the Malta Qualifications Council, and has been operating as part of the National Commission for Further and Higher Education since 2012. Last summer, the Commission moved into the Malta Life Sciences Park, reflecting the growth in this sector, which has raised its headcount (including the MQRIC) to around 30. Different countries use different scales to rank their courses but Malta opted to align the Malta Qualifications Framework with the eight levels used in the European Qualifications Framework – from schoolleaving certificate to doctoral degree – making cross-border comparison very straightforward, not only within the EU but also for the members of the Council of Europe. This is all due to the mutual recognition of qualifications that exists, which has been in place since the 1997 Lisbon Recognition Convention, which has been signed by 53 different countries.
Recognition statements for qualifications may be required for various reasons, primarily to facilitate mobility abroad, but also to pursue further studies, applying for a job or a promotion, qualification allowances, tax rebates, scholarship schemes, and a single permit/visa/citizenship with JobsPlus, among others. Recognition is fairly obvious for some institutions, but for more obscure ones it is not. MQRIC does not directly assess the value of a foreign qualification; rather it consults with its counterparts found in every member of the Council of Europe region, since every country has its own sovereign entities to determine the recognition status of their qualifications, then share this information on grounds of mutual recognition. The assessment of local institution depends on a number of factors. The University of Malta, Mcast and the Institute of Tourism Studies were given a dispensation by law to be self-accrediting, which enables them to level rate their own courses, thus not making it necessary for holders of such qualifications to refer them to MQRIC, unless a holder wishes to present such qualifications abroad, making it advisable to obtain an MQRIC statement. Others institutions in Malta use overseas certification for foreign courses – such as satellite campuses – which would not require Maltese accreditation if issued by an accredited foreign awarding institution. But Dr Sant is concerned that many students do not check before signing up to a course to determine if such course would be recognised locally and consequently abroad. Institutions offering courses from Level Five upwards need NCFHE approval and, if they are the certifying body, then the courses need to be accredited. Accreditation is not mandatory and in fact, there are many industry sectors where courses run parallel to the qualifications framework, like the maritime and aviation sectors, and also IT. This does not make it always easy for recruitment agencies to assess their candidates’ abilities – and Dr Sant recently spoke at a
“Dr Sant is concerned that many students do not check before signing up to a course to determine if such course would be recognised locally and consequently abroad”
seminar organised for them in an attempt to raise awareness. “There is a very fine line between professional qualifications and academic ones, very often down to whether the right to practise is dependent on a certain amount of continuing professional development,” he explained, adding that the current European system was initially set up to address the recognition of traditional academic qualifications rather than professional ones.
“This could make it very difficult for employees to move from certain professional industries onto a different one. You can have a highly qualified professional but without pegging of their qualifications to the Maltese or European Qualifications Framework, an employer from another industry could be at a loss as the value of a professional’s qualifications ?” he said. For more information about MQRIC and the Malta Qualifications Framework, the public may visit www.ncfhe.gov.mt.
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INTERVIEW
When each tourist counts PAUL BUGEJA is an accountant by profession and believes in having checks and balances. He also worked in the hotel industry and is inculcating both these experiences within the Malta Tourism Authority culture. The topic on everybody’s mind is the talks between Air Malta and Alitalia. It does not look as though an agreement will materialise… I have to disappoint you as the MTA is not very much involved in this. Obviously Air Malta is an important asset and a key stakeholder for us. We would be sad to see it in any way losing its potential. We will do all we can to help the airline survive and grow. The leaks so far about the route strategy and how it was aligned with MTA’s do not look very positive. Doesn’t that worry you? Yes, obviously. Some of the routes are being operated for the benefit of Malta, and may not be profitable – we do not know for sure – but being an island, I am sure that some of the routes will have to be operated no matter who is managing the route network. As I did when I was at the MHRA, I still believe that Air Malta needs a partner, mostly in terms of strategic marketing, not necessarily funds. It needs to extend the routes outside the limited area within which it operates. To do that, you either have to have a big enough investment or you have to find a partner where there is a win/win situation, with some assets and some opportunities, and a partner – who could be smaller – but who operates in a different market. Then there would be synergy. I am sure that Air Malta is looking at this and for us it is important that this issue is sorted out. No one is happy with the status quo or with the uncertainty. We have said for so many years that we could not dream of surviving without Air Malta but it no longer has 52 per cent of the market. But Ryanair earlier this year actually took dominance of the market, and there are dozens of other airlines operating to here. Do we still need Air Malta so critically? Ryanair has as many flights – they are still on a level playing field. But not passengers and routes… The question is whether we can survive without Air Malta. Business ventures crop
up and if Air Malta unfortunately has to go some day, I am sure that the business opportunities would present themselves to different airlines – and Malta always manages to find a solution. Why are you moving to Smart City? The decision was taken some time ago to convert this palace to the Museum of Fine Arts. When I came here in August 2014, there were various options but no realistic ones. One of the sites I had my eye on was the former Air Malta headquarters but this was already taken. For a lease, you do not actually need to have a public tender – but I did so anyway and got three quotes, which a committee then ranked, and Smart City and one other location were suitable, but would have cost over €600,000 a year! Fortunately, soon after, it was announced that the Institute of Tourism Studies would move to Smart City. We reduced the footprint we originally wanted – 2,400 square metres – and renegotiated a much better price for one floor. We will consolidate and move our stores and Msida offices there too. The rent will increase slightly every year but I have the option to leave after four years. The government Budget for 2017 had little new for tourism. Did you have a wish list? The Tourism Foundation – which the MTA forms part of – was set up to collect the bed tax and over the past few months since it was put into force, it will have accumulated some €4 million by year end, which will be used on projects. As the MTA, we are working on more accessibility to beaches, including passages across the sand, accessibility for persons with mobility problems, and we also want more Blue Flag beaches. China and India have also been mentioned and we are planning more targeted marketing there. We are not looking at getting millions of tourists from there – or even hundreds of thousands. In fact, the government is talking about 10,000 in 2018 and 50,000 by 2020. This
PHOTO: MARIO GALEA
“e important thing is that we are slowly but surely fighting seasonality” is quite possible, even without direct flights, given the size of the market. We also have an LGBTI project as this is another market that we can tap, one of people who tend to travel more than the average with higher liquidity. There are the so-called ‘rainbow’ statistics on the rights of LGBTI people in 49 different European
countries – and Malta ranks first, with nearly 88 per cent, with Belgium in second place and the UK in third. The important thing is that we are slowly but surely fighting seasonality. In 2013, January arrivals were only 29 per cent those in Continued on page 6
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e Business OBSERVER | November 17, 2016
INTERVIEW
Tourism taking big steps forward Continued from page 5
increasing dramatically, while the number of complaints is fairly stable and very low – around 135. We also split the licensing and enforcement directorates, to avoid any possible conflict of interest. And for the first time, we are also checking on the properties that are already licensed, which never happened before. We check hotels every year but until now not holiday furnished premises. We are also working on a campaign to highlight the benefits of registering your property, and it is working. One of the benefits is getting insurance: few people consider what could happen if something went wrong. We had 508 new applications in Malta so far this year, and 80 new ones in Gozo, almost three times as much as the average for previous years. I do not see us as police trying to find infringements but rather as an authority seeking to improve quality.
August; now it is 33 per cent. And if you take a period like November to April, in 2013, this was 46 per cent of the summer sixmonth total, and is now 49. And yet January arrivals this year reached 85,000, compared to 250,000 in August, so there is still a lot of spare capacity before we say Malta is full up! The MHRA expressed concern about too many new hotel beds being added to the stock. Does the MTA agree? Next year, we are going to have a problem: not enough beds in summer. Demand is high and hotels are increasing their rates substantially. Operators for the UK market are not finding enough rooms and some are actually paying a deposit to secure rooms in advance. I was at the World Travel Market last week for three whole days and this was the issue raised repeatedly. So Brexit is not going to hurt us because of the weaker sterling rate? It appears that a number of operators took hedges on sterling so it is definitely not an issue for next summer. After that, we will have to wait and see as the rate of exchange could recover. At the moment, it is not a concern. If hotel rates are going up, the expectations are raised for the environment outside the hotel too. There is now a master plan for Paceville, where many five-star hotels are located. How do you see it? The idea of getting a holistic plan with the input of all the stakeholders is very good. However, deciding on what there should be in the future is not as important to us as what will happen for the four years that the projects will take. This will be much more of a headache for the tourism industry than how high or low a particular tower would be. We need much more careful study on its impact. Look at the inconvenience when we were just working on one ROAD prior to CHOGM… Unless there is coordination between us, Transport Malta, the operators and the service providers, it will be very difficult and challenging: we need to avoid complaints about the construction phase. The MHRA keeps complaining about the fact that hotels are losing bookings to entities like AirBnB and other direct booking networks which are not regulated. What is the
PHOTO: MATTHEW MIRABELLI
MTA doing about this? Should it even be doing anything about it? AirBnB were here in Malta and met with us. We are not in conflict with them; neither are we their partners – although I do not rule out any joint marketing activities with them in the future, just as we do with Expedia. It has created a lot of activity for Malta, and is a trend that we cannot ignore: why shouldn’t a visitor find a bed for a few euros if there is someone willing to offer it? However, I challenge the assumption that all AirBnB hosts are unlicensed. We have 2,600 licensed units on our register. Obviously there are some who are not… AirBnB is not ready to vet all those who post their properties, not even as a mark of
quality – which is, after all, what we are after, not fees! But their concept is based on peer review so they do not need it. The host is not even paid until 48 hours until after the guest arrives, to make sure that all was what it should be. However, they are willing to work with us on collecting the bed tax. The only disadvantage is that they would pay an aggregate amount, so you cannot identify the owner. But this system is used in other countries so we need to see how it can be done here. The issue for us is control and the MTA has increased its enforcement officers from eight to 18 and are also working on nights and weekends, which was a big step forward. The number of inspections is now
“ere are also many more categories for bars and restaurants, for those who cook on the premises and those that only serve, and so on...”
Tourism Minister Edward Zammit Lewis had promised some months ago that there would be new regulations for restaurants. The Times of Malta has repeatedly highlighted problems with the definition of catering outlets that only take bookings – not walk-ins. Is anything happening? It is one of the loopholes that will be closed… The MTA had discussed it with all the stakeholders and the draft is ready to be presented to Parliament. It includes significant changes. There are 17 legal notices in the subsidiary legislation which will be reduced to eight, and accommodation categories will be increased to have more options for those who want to licence, with appropriate standards for each. These will cater for the AirBnB hosts, for example. There are also many more categories for bars and restaurants, for those who cook on the premises and those that only serve, and so on, all changes that were sorely needed. Even clubs, which previously fell under police control, will have to have a licence if they serve food. And there will be a licence to operate as a late-night entertainment establishment, which was another lacuna. Does that mean more enforcement? More work, more enforcement, more everything. Will it solve the issue of bottle shops? They are not part of this law. They still fall under the trading regime.
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e Business OBSERVER | November 17, 2016
COMMENT
Getting the ball rolling In July 2007, the Labour Party promised it would “promote Malta as a Mediterranean centre for the development of Islamic finance”. And yet nine years later, the idea has still not really taken off. e Business Observer asked stakeholders what is holding things up. KENNETH FARRUGIA
Chairman – FinanceMalta Islamic finance is popular in a number of regions particularly in the Middle East and we are seeing emergent interest in Europe with countries such as the UK and Luxembourg launching sukuks on the market. Nonetheless when compared to conventional finance, the gap is still significant and while Islamic finance-based products and services may be sought by certain clients, conventional products still lead the demand. Insofar as Malta is concerned, the demand for Shariah-compliant finance products and the setting up of operations to provide Islamic banking services is still subdued. On the product side, the MFSA has introduced guidance notes for the setting up of Shariah-compliant funds. However, on the banking side our legislation and regulatory framework still needs to be reviewed to cater for such operations. FinanceMalta also provides information about the opportunities in this space which are equally supported through a number of initiatives. Nonetheless Shariah-compliant operations/services are not key sectors but rather subsets of established areas of business particularly asset management and insurance business.
PATRICK MANGION
Principal/Financial Services Industry – Deloitte Services Ltd Today Malta is a jurisdiction of choice for financial services but up to a few years back we were still relatively unknown. The most challenging aspect to building and growing this sector was enticing the first few promoters to establish a
regulated entity in Malta. This enabled us to build a track record and, to use a cliché, the rest is now history. One draws similar comparisons to what we are trying to do with Islamic finance. Today it is possible to set up a number of regulated structures which are Shariah-compliant. Although there are a few potential projects in the pipeline, Islamic finance has not, up to the present day, really kicked off locally. My expectation is that as soon as the jurisdiction wins the first few Islamic finance mandates, we will create momentum to propel this increasingly important financial services segment forward. Deloitte Malta is particularly attuned to the potential of Islamic finance. We are leveraging on our close contacts and collaboration with Deloitte Middle East to ensure that our jurisdiction has the best possible chances of success in becoming a European Union jurisdiction of choice for Islamic finance.
DAVID ZAHRA
David Zahra & Associates Advocates Malta’s financial services offering needs to re-invent itself. Our tax system is facing significant challenges as international organisations press for a fairer international tax environment. And the economic growth we constantly boast about is borne out of sectors that are, at best, of questionable moral standing. The question we must ask ourselves is: are we innovating ourselves enough to be able to sustain our economic growth should any of the factors on which our economy is based today significantly change? For years now, together with other practitioners, I have lobbied
successive governments in favour of introducing a regulatory framework that is allows ethical financial alternatives, particularly Islamic finance. Islamic finance is a growing niche in the world of financial services that already has a strong foothold in Europe, particularly in the UK and Luxembourg. Both the UK and Luxembourg are significant players in the financial services world and, admittedly, Malta aspires to emulate their successful models. As a result of such lobbying, a number of seminars, workshops and conferences have been organised. FinanceMalta supports these initiatives – it has organised technical workshops together with other industry associations and also issued a sector guide entirely dedicated to Islamic finance. However, the most important development (and least known, I dare say) took place in 2008 when the MFSA issued Guidance Notes on the establishment of investments funds operated on the basis of the principles of Shariah. To my knowledge, these are unique in that they are guidance notes issued by a European regulator (as opposed to the practitioner-driven guidelines which exist in other jurisdictions). Islamic investment funds are an interesting opportunity because they open up conventional methods of finance to investors who are obliged or willing to make investments in an ethical manner, in lines with the principles of Islamic law. Our EU membership, in turn, grants such Islamic funds (in certain circumstances depending on their typology) passporting opportunities throughout the European Union. In my view, should these Guidance Notes be more widely known,
“Little (if any) concrete steps have been taken towards the issue of a sovereign sukuk” they would enhance significantly enhance Malta’s appeal and versatility as a domicile for alternative investment funds. Unfortunately, few people in the Middle East, which I visit frequently, are aware of these structures. This is a pity. It is only recently that practitioners, the Chamber of Commerce (through its Middle East Business Council) and FinanceMalta have upped their efforts to promote these Guidance Notes with one-to-one meetings, roadshows and business delegations to the Middle East. A common response I get from Islamic finance practitioners in the Middle East is that Malta is not yet placed on the Islamic finance world. In the same way as the United Kingdom and Luxembourg have issued sovereign sukuk (or Islamic bonds) as a strong political message that they are open for business to the Islamic financial world, Malta should do the same. There seems to have been the political will to do the same some time back. The Prime Minister was quoted by CPI Financial, an influential Dubai financial magazine, as saying that Malta was
considering issuing a small sukuk “to see what the reaction of the markets would be and to give a political message that this is the sort of instrument we are in favour of.” Unfortunately, other than a very vague (and incorrect) paragraph in the minister’s budget speech for 2015, little (if any) concrete steps have been taken towards the issue of this sovereign instrument. Sukuk would offer an alternative way of raising money in the international markets and also offering a viable option to those investors investing according to their religious principles (such as those applying under the citizenship programme who are obliged to acquire interest-bearing sovereign paper). The issuance of sovereign sukuk will show that the Maltese government is truly committed to strengthening trade links with the Middle East and to creating new sectors and niches in our financial services offering as a jurisdiction. And let us not forget the launch by the Malta Stock Exchange of a Shariah-equity index – another important strong message to the Islamic financial world.
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e Business OBSERVER | November 17, 2016
INTERVIEW
PHOTOS: MATTHEW MIRABELLI
Futureproofing financial services: the MSE strategy The funds industry has clearly slowed and needs to be replaced by new business, the chairman of the Malta Stock Exchange Joe Portelli has warned. “There is no question about it,” he said, stressing that the time had come for capital markets to complement the island’s funds and captive insurance industries. For Mr Portelli, it is a nobrainer. He believes it is no coincidence that Luxembourg is the second richest country in the world on a per capita basis and that its financial industry makes up a third of its GDP – seeing a clear link between the two. “It is time for us to internationalise because the stakes are huge. I am very bullish on the idea that we can build one heck of a financial centre in Malta. “If we had to choose between factories bellowing smoke or handsome office blocks with people in suits making significantly more money, isn’t the latter what we would choose?” he said. The MSE recently published its strategic plan for capital markets, which includes a number of changes to its operation, but where the main thrust is to introduce completely new areas of activity.
“The capital market has been the neglected step-child over these last 25 years since the MSE was set up,” he said, adding that the recent Budget was “definitely capital markets’ friendly” but that this did not mean the MSE was losing its determination to in parallel improve local listings, which were also boosted by various Budget measures. “The idea that an entrepreneur can make a few million euros by
listing his company profits and not having to pay tax on them… if that is not a huge incentive to list then I don’t know what is. In fact, when we came out with the proposal, a businessman sent me an e-mail and said he had heard about the ‘15 to 0’ (15 per cent tax rate to zero tax rate) and lamented that he had just sold his company. He told me that had he heard about it, he would have listed his company instead.”
“e Stock Exchange will only make €1,000 for each of these listings but the multiplier effect is huge”
But Mr Portelli, who has over 30 years’ experience within the financial industry in the US and Malta, is clearly anxious to dream a bit bigger than boosting the number of local equities and of bonds. “Previous chairmen have brought the MSE to where it is now, quite an achievement. But the domestic market is now limiting us. This is the first board that wants to internationalise Malta. Our vision is to compete with Luxembourg and Ireland. They have 80,000 international listings and we have one. Every time an international bond lists, an international lawyer is going to charge €25,000 to do the offering documents. There is going to be an accounting company involved. With securitised products, there are trustees, special purpose vehicles etc.,” he explained, stressing that his focus was the Maltese economy and not the MSE’s income: “The Stock Exchange will only make €1,000 for each of these listings but the multiplier effect is huge.” Although FinanceMalta has been actively pushing the Maltese financial industry, he sees no harm in the MSE also vying
for more business in its own right: “We had a handsome sum for business development but hardly used a third of it!” Another frustration for him is that the MSE currently does not list any securitised vehicles as interested parties are directed to the European Wholesale Securities Market – which is 80 per cent owned by the Irish, with only 20 per cent of the shares owned by the MSE. The EWSM is a Maltese entity and is located in Malta, with a board of directors which meets here. In theory the business – much of which originates from Maltese introducers – could be listed on the MSE but in practice, it goes to the EWSM. One solution would be for the MSE to increase its stake but he admits that although this was brought up with the Irish, they are not interested. “It is not easy being motivated about a project when you are such a minority shareholder,” he shrugged. He once again stressed that this was not about getting business for the MSE but to futureproof the financial services sector.
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INTERVIEW
“The current imputed tax system that we have now is so important to us that I cannot imagine we would allow it to go away lightly. The government has already made it very clear that it is a major strategic interest to us. “But our strategy to bring capital markets to Malta would shield us in many respects. Why? Because these companies do not necessarily have to be here in Malta. What we want is for them
to use the MSE as a listing venue for their shares and bonds – which does not require these companies to set up here. “Having said that, if we are successful in promoting our capital markets, it will also help. It will clearly help our funds industry, our insurance industry and our corporate services industry. It is clearly a good thing. A rising tide lifts all boats.”
Exchange-traded Funds Exchange-traded funds were not even envisaged when the MSE’s listing rules were written 25 years ago. However, there are now 6,300 ETFs in the world, with roughly $3.4 trillion in assets. “Today, they are a very big thing and we need to allow local fund managers to manage and list them, but more importantly we need to allow foreign ETFs to list on the MSE,” Mr Portelli said. In essence, an ETF is a fund that lists on an Exchange, as opposed to being open-ended, and it trades like shares. With a traditional open-ended fund, it could take two or three days to invest, and many funds have a minimum investment, which could run into thousands. ETFs, on the other hand, can be bought or sold in seconds, even online, for minimal cost. This is because they are ‘passive’, based on an index, and are therefore much more inexpensive to manage. Investors can also buy just one share and don’t need to invest thousands, meaning they are much more accessible for retail investors although professional investors would also find them of interest. Although ETFs’ fact sheets give all the details of the fund, providing full transparency, these have various levels of complexity. ETFs come at various levels of risk, ranging from corporate bond ETFs to investment-grade bonds, and high-yield bond ETFs which invest in lower grade bonds. There are also inverse ones where the ETF will go up in price as something else goes down. “We would like to give the chance to some investment managers to create ETFs here in Malta so people can invest in them and diversify,” he said. To introduce ETFs, the Malta Financial Services Authority would need to change the listing rules. “So it can be done very quickly. I know all the top people at the MFSA and they have been very receptive. We have meetings scheduled to discuss these points,” Mr Portelli said.
Real Estate Investment Trusts
CHAIRMAN OF THE MALTA STOCK EXCHANGE JOE PORTELLI
“If we are successful in promoting our capital markets, it will also help”
If you are 30-year-old and have €20,000 to invest in real estate, there would not be many options if you wanted to buy a property. However, you could put the money into an REIT based on multiple properties. “Instead of our example of a man or woman buying a flat, they could invest the money in this security, which would trade on the Exchange and which might have 20 properties all over Malta, ranging in type and locality,” he said. Mr Portelli sees obvious advantages in spreading out the risk across various properties in different categories and different locations. He also believes that by enabling people to invest in real estate this way, it could reduce speculation. There are roughly 35 countries in the world that have legislation for REITs. Usually, the owners put a number of properties in a vehicle, which they then list on the exchange. The terms are different from country to country. In the US and the UK, 75 per cent of the vehicle’s income has to come from rentals and 90 per cent of the rent has to be distributed as a dividend.
“This is not a speculative vehicle as the company only keeps 10 per cent of the rental income, which it can use to pay for maintenance and so on. Of course, the company enjoys the capital appreciation of the properties.” There are many types of REITs, set up specifically for categories like hospitals, apartment blocks and commercial properties. “Say you own a huge commercial property worth €10 million and you want cash to acquire another company. You can sell the entire property or just put half of it into a REIT. The REIT gives more flexibility if the owners want to monetise their investment, for whatever reason,” Mr Portelli explained. In this case, the law would need to be changed as the Financial Markets Act would have to define a REIT and the conditions under which it can be established, something which he insisted would not be that hard to do, especially if the government intended to go ahead with the third category of proposed activity: Islamic finance.
Islamic Finance Islamic Finance has been written about and discussed at various conferences. The MFSA is the only EU regulator that has issued formal guidelines on Sharia-compliant investments and FinanceMalta has issued guides on the topic. But it seems to have stopped there: Islamic finance is not actually in the rule books. Mr Portelli admits he is bewildered: “All we are talking about is being bankers and financiers to people and companies interested in Islamic finance. Luxembourg and Ireland are both involved and have been for almost a decade. If it is good enough for them then it should be good enough for us. There is no reason why Malta should not be the Islamic Finance centre in the EU.” He often hears the argument that there is no demand here – there are only around 9,000 Muslims said to be living in Malta – but he thinks that many people are missing the point. For a start, there are 20 million Muslims living in the EU and this number is set to grow. He pointed out that there was also growing investment in Malta from the Gulf and North Africa: Qatari investment in Banif; Tunisie Telecom in GO; and the American University. “If we are seeing this investment from the Middle East and North Africa, then there is no reason why we should not in one way or another cater to Islamic finance. “The funds industry is huge and lucrative and so is the ETF industry. Guess what? The Islamic Finance one is larger than both, and it is growing,” he said, clearly frustrated that his arguments were falling on deaf ears. According to the IMF, Islamic finance assets saw double digit growth in the past decade and topped $1.8 trillion in 2013 – around one per cent of global financial assets. Sukuk issuance increased 20-fold between 2003 and 2013, reaching $120 billion. Indeed, Mr Portelli believes that the best way to get into this sector would be to issue a sukuk, the equivalent of an Islamic bond, once the right legislation is in place. He challenged the government to set an example by issue a sukuk itself, “even a small one”. “There was talk in the past that the government would issue a sukuk but this died down because its bonds are already oversubscribed in minutes so there was not really any need for new instruments. But it would set the ball rolling…”
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e Business OBSERVER | November 17, 2016
CASE STUDY
Trade licences on their way out Vanessa Macdonald Trade licences are finally going to be abolished, as from January 1, 2017, following a concerted effort by Malta Enterprise. Around 15,000 entities will no longer need to have a trade licence in order to operate, except for very specific categories like buskers, street hawkers and auctioneers – usually where the operation would not be covered by a Planning Authority permit. Around 1,400 of the new businesses currently being created every year will also be spared. Malta Enterprise chief operating officer Marika Tonna and the chief officer for research and policy review, Marco Abela, coordinated the removal of the licence as part of a larger campaign started a few months ago to simplify business, which has also brought the time to set up a new business down from 28 days to just 48 hours in most cases. Although there has been talk of reducing bureaucracy for several years, the final straw seems to have been the poor rating given to Malta by the World Bank in its global assessment of the ease of doing business. The task has been tackled a number of times, but entities such as the Better Regulation Unit and the Commission for Simplification have not managed to get nearly as far as this team, which Ms Tonna said was down to their refusal “to take no for an answer”. “We are there to attract investment. So although we are not an authority, we felt that it was part of our role to tackle this,” Mr Abela added. Malta Enterprise, with a remit from the Office of the Prime Minister, worked with the Management Efficiency Unit and Business First, sitting face to face with each and every entity to try to persuade them that the status quo no longer
MALTA ENTERPRISE CHIEF OPERATING OFFICER MARIKA TONNA. PHOTO: DARRIN ZAMMIT LUPI
“Given the number of operators, licence fees add up and the government stands to lose around €1.4 million every year”
made sense. Trade licences were originally issued by the police, who would painstakingly list in a ledger all the products that the operator would sell. However, over the years, as the business environ-
ment got more sophisticated, the number of checks and balances increased, from the Planning Authority for the location and its impact on its surroundings, to the Public Health Department for
sanitary and hygiene considerations. The fiscal side was also tightened by the introduction of VAT. All in all, the licence itself had became outdated and yet, no one was willing to bite the bullet. The situation was even more nonsensical, she explained, because so many operators never got round to applying for a licence, while others who did would not renew it from year to year – which created an unequal playing field, even though the cost of the licence was as little as €70 in some cases, to a maximum of €1,000.
Given the number of operators, licence fees add up and the government stands to lose around €1.4 million every year – but the fee hardly covered the costs of its administration and collection. Just as welcome will be the simplified process to set up a business. Mr Abela explained that in the past, applicants were sent from pillar to post, having to fill in some seven to eight forms for different entities. “Much of the information was common to all these forms. And other entities needed information that was not being collected.
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“Now we have used the benefits of technology, thanks to government IT agency Mita, to set up a single two-page form for the applicant – either a company or a selfemployed person – to submit, which is then automatically disseminated to the entities involved – like the National Statistics Office, JobsPlus and the Data Commissioner – with all the information required, instead of the applicant going to each and every one. “And NACE categories relating to food will also automatically trigger information being sent to the health authorities,” he said, adding that the procedure was already available online. “We are not going to stop here,” Mr Abela promised. The next phase will by year end enable authorised intermediaries like accountants and auditors to submit applications on behalf of their clients, and will expand the scope to partnerships. The next phase starting in January will be even more challenging as it will not look at the starting up of a business but at their operation and winding up, which is far more complex. There are also anomalies that make even less sense that it wants to sort out: “If an oil tanker on Hurd Bank finds a buyer for its cargo of oil, they need to send a sample for analysis by a laboratory. “But to get that one or two litre sample into Malta, you would need to go through exactly the same amount of paperwork that you would if you were importing tanks of fuel to sell commercially, down to economic sanctions and excise taxes!” he said. Ms Tonna and Mr Abela are crossing their fingers that the huge leap in response time will improve Malta’s ranking for ease to do business, which went up by seven places in the 2017 report out recently, even though it did not
“e next phase will by year end enable authorised intermediaries like accountants and auditors to submit applications on behalf of their clients, and will expand the scope to partnerships”
reflect all the improvements made since the previous report. “Unfortunately, the World Bank methodology does not really help Malta. For example, the case study is based on theoretically opening a warehouse in the capital city. Well, can you imagine opening a warehouse in Valletta, getting a PA permit for this Unesco World Heritage Site and asking Enemalta to install a substation somewhere to feed it with power?” Ms Tonna shrugged. “The input is also very heavily weighted towards eight legal firms, which supply 19 out of the 40 consultees. A wider array of contributors might give a more accurate picture.”
Local Entrepreneurs
Foreign Entrepreneurs
E-form
Currently
Currently
After Simplification
Self Employed
6/7 forms
9/10 forms
1 e-form
Companies
7/8 forms
9/22 forms
2 e-forms
Partnerships
7/8 forms
9/22 forms
1/2 e-forms
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e Business Observer is Malta’s leading business newspaper distributed with Times of Malta every fortnight. Editorial Vanessa Macdonald, Assistant editor, Times of Malta.
EDITORIAL
Time to reassess Air Malta The time has come to take an unemotional look at what would happen if the Air Malta deal with Alitalia fails to materialise – with no other option on the cards. Until now, talk about the importance of Air Malta to the tourism and the business sectors were coloured by patriotism and nostalgia, both noteworthy motivations but ones which need to be revised in the cold light of reality. The Malta of today would not have been possible without Air Malta, which forged connections with the mainland that allowed us to flourish, opening up tourist markets, enabling business travellers and supporting incoming and outgoing cargo. No one will ever dispute that; but neither should they dispute that the Air Malta of today is one that was riddled with the sins of various legislatures, from a bloated workforce with unsustainable collective agreements, to inappropriate plane purchases, and from overambitious route networks to inflexible pricing that alienated passengers. This is why, when Ryanair turned up 10 years ago, the situation was ripe for its loyal customers to defect, all talk of patriotism and national airlines forgotten. But Ryanair is not the only story: there are now over 50 international airlines serving Malta. We can no longer claim that Air Malta is our lifeline: it only serves 18 destinations this winter, compared with Ryanair’s 38 routes. So much for Air Malta being the only carrier to provide a year-round service, no matter whether profitable. In the past we heard ad nauseam that Air Malta represented 52 per cent of all the traffic into Malta. The Business Observer reported on October 20 that Ryanair was forecasting that it would have 40 per cent of the market share, and to carry two million passengers.
Let us be honest with ourselves: the Air Malta of today cannot afford to operate routes merely because there is some compelling national interest. And the Air Malta of tomorrow would have even less leeway. Would and could the government pay the airline, whether with or without a strategic partner, a public service obligation to operate economically unfeasible routes, just as it pays the bus service to go to outlying areas and the Gozo ferry to operate through the night? Is that actually going to solve anything? The Air Malta of the future would need to stand on its own two feet, even if it has a strategic partner. Unless we manage to find a charity willing to plough money into it merely to keep it alive out of some altruistic fervour, it would have to rationalise. No loss-marking company has ever been bought out without a harsh evaluation of its headcount, its operational costs, which of its segments makes a profit and what its long-term sustainable future strategy should be. At present, Air Malta is unable to take those steps, even though there are undoubtedly many who know exactly what it should be doing: the political cost is way too high. The Malta Tourism Authority chief executive, Paul Bugeja, made a courageous statement in today’s interview: Air Malta is no longer critical to the island’s survival. Yes, it would be fantastic if a formula were to be found – for a multitude of reasons, not the least of which is its workforce – but if not, there will be other airlines who would step into its already much diminished shoes. The Air Malta of the future will never be able to sustain the economy and tourism the way it used to in the pre-EU days of subsidies and government support. It’s time to face up to that.
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BUSINESS OPINION
Good morning America!
Joe Zammit-Lucia On November 9, America – and the world – woke up to a very different sort of morning. For some (60 million Americans at the very least) it was a jubilant morning. For others, it was a morning of dismay or even despair. For yet others – well, they just got on with their daily lives. Following the Brexit vote and now Trump’s victory, it would be a foolish person who still wants to be into the game of predicting the future. None of us has any idea how a Trump presidency will evolve, nor which of his policy statements he will stick by and which will be jettisoned. So how should business – and particularly big business – prepare itself for the new world to come? Here are some suggestions. First, business leaders must get over the idea that, for business to thrive, it needs stability and predictability. Global political uncertainty is here to stay – no matter how many business leaders stamp their little feet in frustration. The businesses that thrive will be those that learn how to manage in a highly
uncertain, highly unpredictable world. Those who continue to demand stability and predictability will fail. Second, elections are important not just because of who wins but because of what the campaigns themselves tell us about the culture that we live in and the perceptions and aspirations of the public. Let us just focus on three main themes that emerged during the campaign. One doesn’t have to agree with these narratives – but they did win the election. Business has taken greed to excess. It has captured government through lobbying and through the extortion of favours and special deals in return for campaign contributions. While – sadly – legal, this is now seen as being fundamentally corrupting of our democracies. And neither does this apply only in the US. Malta is not immune to the same charges. Trump gained support because he convinced people that he was too rich to be bought by the wealthy elite. Globalisation is past its sell-by date. Rather than being a source of peace and widespread prosperity, it is now a tool by which the rich can continue to enrich themselves at the expense of the poor and the worker. It is a mechanism by which multinational companies can play off one government against the other and avoid paying their fair share of taxes. Protectionism, not globalisation, is the new mantra. Trump won in traditionally Democratic states because of his promise to defend American jobs against the excesses
A WOMAN LOOKS AT STORIES ABOUT THE VICTORY OF US REPUBLICAN PRESIDENT-ELECT DONALD TRUMP IN TEGUCIGALPA, HONDURAS, ON NOVEMBER 9. PHOTO: JORGE CABRERA/REUTERS
“Elections are important because of what the campaigns themselves tell us about the perceptions and aspirations of the public” of globalisation. Voters felt that the Democrats, once ‘the party of the people’, had abandoned them and been complicit in exporting their jobs to China and Mexico. Immigration is a net negative rather than a net positive. It opens countries to labour competition that encourages a race to the bottom in terms of wages and working conditions. It allows business to import ready-made skilled workers while throwing local people on to
the rubbish heap instead of investing in training and re-training them. Not to mention the security and cultural implications of uncontrolled immigration. There are many others. But even if we only focus on these three themes, it is clear that there is a significant cultural change happening that will shift the ground beneath us. These changes are not limited to America. The Brexit vote and the rise of
Eurosceptic parties everywhere are all part of the same phenomenon. The more we find these changes surprising or even shocking, the more it shows how out of touch we are with a big section of the public. Business leaders would do well to understand this tide of cultural change and what it might mean for their own particular business. joezl@me.com
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NEWS
Opec points to bigger 2017 oil surplus Opec reported an increase in its oil production in October to a record high led by members hoping to be exempt from the producer group’s attempt to curb supply, weighing on prices and pointing to a larger global surplus next year. The Organisation of the Petroleum Exporting Countries pumped 33.64 million barrels per day (bpd) last month, according to figures Opec collects from secondary sources, up 240,000 bpd from September, Opec said in a monthly report. The Opec figures point to a bigger surplus than those of the International Energy Agency and underline Opec’s challenge in restraining supplies. Oil fell below $45 a barrel after the report was released, having reached a 2016 high near $54 after Opec’s deal was announced in September. Opec made little mention of the surprise election of Donald Trump as the next US president, beyond noting that currency markets had seen “significant” volatility. It left unchanged its 2017 forecasts for US and world economic growth. “More data over the coming months will provide further insight to allow a more detailed review of the US economic situation, particularly after the most recent elections,” Opec said in the report. To speed up a rebalancing of the market, Opec agreed at a meeting in Algeria on September 28 to cut supply to between 32.50 million bpd and 33 million bpd. The group hopes to finalise further details at a meeting on November 30. The latest figures could complicate Opec talks on how to share out the cuts. Opec experts meet to discuss this on November 25 and on November 28 will meet officials from non-Opec countries, Opec secretary general Mohammed Barkindo said this week. According to Opec’s report, October’s supply boost mostly came from Libya, Nigeria and Iraq – members that have sought to be exempt from cuts due to conflict. Iran, seeking an exemption as output was held back by Western sanctions, also pumped more. Opec uses two sets of figures to monitor its output – figures provided by each country, and secondary sources which include industry media. This is a legacy of old disputes over how much countries were really pumping. Iran told Opec it produced 3.92 million bpd in October, while the secondary sources put output at 3.69 million bpd. From Iran’s point of view, joining the Opec supply cut deal from the higher figure would be more favourable. Opec issued a revised report last Friday to add Iraq’s figure. Baghdad, which questioned the accuracy of the numbers, told Opec its October output was steady at 4.77 million bpd – 210,000 million
bpd more than the secondary sources estimate. That aside, Opec’s report is the latest to show output is hitting new peaks. The October figure is the
highest since at least 2008, according to a Reuters review of past Opec reports. In the report, Opec trimmed its forecast of nonOpec supply this year, although
supply growth in 2017 is put at 230,000 bpd, little changed from last month. With demand for Opec crude in 2017 expected to average 32.69 mil-
lion bpd, the report indicates there will now be an average surplus of 950,000 bpd if Opec keeps output steady. Last month’s report pointed to an 800,000 bpd surplus. (Reuters)
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e Business OBSERVER | November 17, 2016
STOCK MARKET REVIEW
From ‘Trump Dump’ to ‘Trump Rally’
Edward Rizzo During the hard-fought US presidential campaign, many financial journalists and investment bankers published their expected reaction across global financial markets in the event of either a Republican or a Democratic win. Up until a few days before the election on November 8, many financial journalists actually titled their articles: Markets Set To Plunge If Trump Wins and The Trump Dump. There was widespread consensus that a victory for Republican Donald Trump would create global economic uncertainty and send equity markets into turmoil, while the US dollar would weaken significantly and bond prices will rise. On the other hand, a victory for Hillary Clinton was viewed as positive both for equities and the US dollar and negative for bonds as the Federal Reserve would commence lifting interest rates periodically. In fact, in the run-up to the election, equity indices rose upon indications that Clinton was ahead in the polls and fell when Trump began to close the gap. Indeed, on November 7 (the day before the election), the Dow Jones Industrial Average index registered its best performance in eight months after the FBI cleared Clinton from a second investigation into the use of her private e-mail server when she was secretary of state. During the early hours of Wednesday morning, as it became clear that Trump could indeed make it to the White House contrary to what many pollsters were
PHOTO: SHUTTERSTOCK
predicting, the Japanese equity market (which was open at the time) plunged by six per cent, the US dollar weakened to 1.13 versus the euro and the indications were that European and US equity markets were expected to drop by between four to five per cent at the open. The main headlines across financial journals in the very early hours of Wednesday morning were Dow Futures Dive 800 Points On Eection Jitters; S&P 500 Futures Plunge 5%. Then, shortly before European markets opened on Wednesday, yields across the eurozone weakened significantly (the 10-year benchmark German Bund yield
“As Clinton conceded defeat and Trump delivered his victory speech... there was a sudden turn of events across global financial markets”
tumbled to 0.093 per cent from 0.188 per cent on Tuesday), indicating an uplift in bond prices. The markets were at that point reflecting what the vast majority of financial analysts were anticipating. However, as Clinton conceded defeat and Trump delivered his victory speech in a very conciliatory tone and void of any of the absurd policies that he had mentioned during his campaign, there was a sudden turn of events across global financial markets. The speech by the President-elect reassured the markets that he would cut personal and corporate taxes and spend billions of dollars on boosting the country’s infrastructure.
Although European equity markets opened lower as expected, they quickly recovered and staged an astonishing recovery to close the day sharply higher. By way of example, Germany’s DAX opened 2.9 per cent lower before rallying to end the day 1.6 per cent above Tuesday’s close. Meanwhile, the US dollar began to strengthen once again while bond prices dropped as yields rose across the globe. This sudden reversal caught many market observers wrongfooted. One of the most plausible reasons cited was that the result of the 2016 Presidential election was in line with historical norms as a clear winner emerged, the loser
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STOCK MARKET REVIEW
conceded, and the President gave the customary unity speech. Following a very divisive campaign, positive sentiment returned as high ranking officials within the Republican party who had differing views from Trump during the campaign showed signs of support for him following his electoral success. The pledges by the Presidentelect to cut taxes and deliver a package of infrastructure spending raised hopes of faster economic growth and higher corporate profits. However, although the main headlines across the world highlighted the Trump rally as equity markets raced higher and the Dow Jones Industrial Average hit new record levels, share price performances differed. In fact, while some companies saw their share prices rally strongly, others performed poorly. Speculation that the Presidentelect could ease regulation on banks sent bank shares soaring across the world. In the US, the share prices of all the main banks performed very positively last week. In Europe, Deutsche Bank was among the best performers last week with a share price rise of 20 per cent followed by UBS with a rise of 17 per cent. The focus by the President-elect on overhauling the country’s infrastructure helped boost the share prices of mining and construction companies. Furthermore, healthcare and pharmaceutical companies also performed positively following the US election result as these companies are expected to benefit from reduced regulatory scrutiny and stronger pricing power. On the other hand, the share prices of companies doing business in Mexico were among the biggest losers. During his campaign, the President-elect argued the need to renegotiate or withdraw from the North American Free Trade Agreement between the US, Mexico and Canada and to build a wall along the US-Mexican border. Many car companies have factories in Mexico due to lower labour costs and as a result, the share prices of companies such as Daimler, BMW and Fiat Chrysler all weakened on Wednesday. Moreover, one of the worst performers in the UK was the fructose manufacturer Tate & Lyle. Its share price dropped by more than
“Gold, which was widely viewed as one of the assets to own in the event of a Trump victory, also tumbled sharply”
11 per cent on Wednesday due to the fact that the company generates about 10 per cent of its profits from Mexico. Gold, which was widely viewed as one of the assets to own in the event of a Trump victory, also tumbled sharply. Perhaps, the most surprising development was in the international bond markets. In anticipation of a significant rise in spending by the US government which will lead to higher debt levels and inflation in the US, yields across the world rallied. In the US, the yield on the 10-year Treasury rose to 2.24 per cent – the highest level since January 2016 and up from 1.86 per cent shortly before
the US election. In UK, the 10-year gilt yield jumped to 1.43 per cent from an all-time low of 0.53 per cent in August in the aftermath of the Brexit referendum. In Germany, the 10-year Bund yield rallied up to +0.40 per cent last Monday compared to a low of -0.20 per cent on September 28. Few would have expected such a sudden turn of events for bond markets. As a result of the rally in yields across Europe, the Malta Government Stock market was also heavily impacted. In various articles over recent years, I documented how developments across international markets also affect the MGS market. The surge in yields across the eurozone rocked
it on Friday and prices declined significantly with some individual bonds dropping as much as four percentage points (400 basis points). As indicated in some of my earlier articles, the prices of longer-term bonds are the most vulnerable to rising yields. This was also evident in Malta as the steepest declines were those of the longer-dated MGS while the shortand medium-term MGS suffered much lower declines. Although many investors may be shocked at the sudden decrease in MGS prices of Friday and Monday, it is worth noting that a number of the longer-dated bonds merely shed the gains recorded in recent months arising from the sudden downturn in yields following the Brexit referendum. As such, investors should remain aware that some of the strong gains in a number of MGSs are very much still intact. The sudden turn of events is also another reminder that timing the opportune moment to sell out is impossible even for the most seasoned investors. While the immediate reaction across equity, bond and currency markets has been remarkable and
Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) 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. RFC, its directors, the author of this report, other employees or RFC 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 RFC, 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. © 2016 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
indeed contrary to what most analysts predicted, the actual policies that will eventually be implemented by Trump are not yet clear. There remain several high ranking officials within the Republican party who do not share the same radical views as the President-elect. This alone is likely to create lots of uncertainty in the weeks and months ahead. Meanwhile, the market’s focus will turn towards the referendum in Italy on December 4, the European Central Bank meeting scheduled for December 8 and the US Federal Reserve meeting on December 14. These are likely to be very important events for investors with a wide-ranging impact across all asset classes. Edward Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd.
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BUSINESS UPDATES
HSBC Bank Malta supports Women Directors Malta
(FROM LEFT) HSBC MALTA CEO ANDREW BEANE, WOMEN DIRECTORS MALTA PRESIDENT MICHELLE GIALANZE, HSBC MALTA CHAIRMAN SONNY PORTELLI, WOMEN DIRECTORS MALTA COMMITTEE MEMBER MARIA CASSAR, AND HSBC MALTA HR PROJECT MANAGER LOREDANA MALLIA AT THE AGREEMENT SIGNING.
HSBC Bank Malta will become the first organisation in the country to support a new non-profit organisation, Women Directors Malta (WDM), in its objective to improve gender diversity at board level across the country. WDM was set up to help women make the right connections and reach board level within their own organisation or to take on a non-executive board role and other board level roles in other sectors. The nonprofit organisation works to cultivate a new understanding and acceptance of the strong impact women deliver at top levels. HSBC Malta chairman Sonny Portelli, CEO Andrew Beane and WDM president Michelle Gialanze signed the agreement, which sees the bank support various outreach campaigns and events of WDM. “WDM has consistently argued that women of all backgrounds should have equal opportunity and equal access to progress to board level positions, creating a level playing field. “Board appointments should be made on the basis of commercial needs, skills and ability. It also believes that there are clear business arguments for appointing women at board level,” said Ms Gialanze. WDM will today be launching a Charter and Quality Mark which recognise and reward organisations that provide diversity on boards. The event is being held at The Casino Maltese. More information on info@womendirectors.org.mt
iMovo and Salesforce partner up Al Faisal given majority holding in Banif Bank (Malta) Plc – launch event in December iMovo, a leading customer experience management company, has just announced a new partnership with Salesforce, (NYSE: CRM), the customer success platform and the world’s number one CRM company. Salesforce offers an innovative platform of business applications that helps businesses stay on the cutting edge of cloud, mobile, social, and data science technologies. More than 150,000 businesses around the world use Salesforce. The official launch event, titled ‘How To Make Customers Love You’ will be held on Thursday, December 1 at Corinthia San Ġorġ. The event will give unique insights as to how executives can grow their business by harnessing customer relationship management and driving better and deeper relationships with their customers. It will also cover how this new and exciting partnership will benefit organisations based in Malta. Pierre Mallia, managing director at iMovo, said, “Partnering with Salesforce,
the world’s number one CRM company, was a natural step for iMovo, in terms of our mission to be the thought leader for organisations that want to build profitable, long-term relationships with their customers. We are looking forward to the launch event to demonstrate how Malta based-companies can achieve success by using Salesforce.com to get closer to their customers. We invite interested parties to join us and participate in a healthy discussion.” The half-day event is targeted at senior executives, directors, CxO-level professionals, IT and sales and marketing managers from a variety of industry sectors including financial services, ICT-based services, iGaming, manufacturing, retail, distribution and other related fields. The event is free of charge. However, due to limited seating, attendance is subject to confirmation and successful registration will be confirmed by e-mail. For more details and to register please visit imovo.com.mt/events
Al Faisal International for Investment (AFII), the Financial Investment Company of Al Faisal Holding Company, one of Qatar’s largest private diversified industry groups, has acquired a 78.46 per cent shareholding in Banif Bank (Malta) plc. AFII has completed the acquisition of the majority stake from Oitante SA, following receipt of regulatory approval by the European Central Bank and the Malta Financial Services Authority. The remaining 21.52 per cent of Banif Bank (Malta)’s shares are held equally by four Maltese shareholders. AFII will appoint three non-executive directors to the bank’s 11-person board. AFII will be providing Banif Bank (Malta) with additional capital resources to further strengthen the bank’s capitalisation and to support its focused diversification and expansion plans. These plans include enhancing the bank’s existing range of services for retail and corporate customers and the development of new private banking and investment banking services. “Banif Bank Malta has quickly established itself as an increasingly important part of Malta’s financial services
landscape and it is a bank in which Al Faisal is proud to have become the majority shareholder,” commented Sheikh Faisal Bin Qassim Al Thani, chairman of Al Faisal Holding. “Across the globe, Al Faisal’s strategy is to establish market-leading standards of operation and service in every region and sector in which we operate and Banif Bank (Malta) will be no exception. Banif Bank (Malta) will be Al Faisal’s first financial services investment in Europe and we expect it to be the first of more investments in Malta across a number of different sectors.” “Banif Bank (Malta) welcomes Al Faisal International for Investment as our majority shareholder,” said Joaquim Francisco Da Silva Pinto, chief executive officer of Banif Bank (Malta). “While in the short term it will be business as usual for our customers as we consolidate and expedite our current growth strategy, with the backing of such a major, global investor we look forward to leveraging new resources and expertise to further develop and enhance the bank’s services and relationships with all our stakeholders.”
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e Business OBSERVER | November 17, 2016
BUSINESS UPDATES
Institute of Directors Malta launches Brexit event James Satariano, the chairman of the Institute of Directors Malta (IoD), has announced that although no one can predict with any great accuracy what the EU will look like in 10 years’ time, IoD Malta is holding an important event in conjunction with the British High Commission and the Malta Institute of Management to highlight opportunities and threats for the Maltese islands related to Brexit . The event, entitled What Future Is There For Malta, Britain And The EU After Brexit?, will be held at the MFSA Conference Room next month and features three keynote speakers moderated by IoD Malta’s representative to ecoDa (European Confederation of Directors’ Associations), Edwin Ward. Mr Satariano stresses that an impressive list of speakers has been assembled for this IoD event which starts at 3pm on Friday, December 2: British High Commissioner Stuart Gill, and well-known business author Roger Barker, a UK member of the European Economic and Social Committee (the EU advisory body), senior advisor to the board of the ecoDa and chairman of the ecoDa Education Programme for European Directors. Mr Satariano said: “Strong internal disintegration forces exist both in the UK as well as in the EU. They create negative dynamics, hampering the economic governance of the eurozone as well as the success of any common migration policy. Solidarity is being undermined, which makes the commonly envisaged scenario of an integrated core EU surrounded by a reluctant periphery a less credible option.” Mr Satariano continued, “Nevertheless, two external phenomena are creating a dialectic that could be stronger than the internal European disputes. Security will become ever
more crucial: the continent is surrounded by authoritarian countries, such as Russia and Turkey, as well as unstable regions from Africa to the Middle East. Islamist terrorism is threatening our cities. Irrespective of the US election and Trump’s unexpected success, the American presence in Europe will surely be reduced, and as a former president of the Maltese-American Chamber of Commerce I am well versed in the American situation in Europe. The need to tackle defence issues could result in a leap towards integration. Security crisis management has little to do with a rules-based EU dealing mainly with the economy. This could result in deep splits in the EU, or save it.” In conclusion Mr Satariano said, “In a globalised world, scale is of the utmost importance. European integration is vital, to secure favourable trade deals and to safeguard data protection or intellectual property rights. It is time to admit that the best way to remain sovereign is to pool our national sovereignties. The withdrawal of the UK, which, for example, blocked the adoption of anti-dumping measures against China might help the EU to be more assertive in delivering what its citizens expect in times of globalisation. In an uncertain geopolitical environment, and taking into account the costs and difficulties of Brexit, it will become increasingly evident that a marriage of convenience can look better than a divorce. Malta has a role in all of this and that is what we will be discussing indepth at the MFSA on December 2.” To register for the IoD Brexit event kindly contact secretarial services by e-mail: ssl@go.net.mt or call 2133 6507, IoD members and MIM members benefit from a reduced fee of €45 while non-members may attend at €55.
Trade Finance for SMEs As the bank for SMEs, Bank of Valletta seeks to bring financial solutions that address the players of this economic sector’s specific needs, helping them to grow and broaden their horizons. The BOV JAIME Financing Package is the latest in a string of such initiatives undertaken by the bank. Bank of Valletta’s offering is not limited to financing opportunities, but is comprehensive and includes all aspects of financial services, including trade finance. In today’s dynamic world, trade finance remains an important component for any player seeking to grow their business beyond their shores. Set up in 1993, Bank of Valletta’s Trade Finance Centre offers a holistic approach built around the customer. The team is well-versed in this area, having a good knowledge of the political, economic and environmental issues relating to the different markets, as well as an in-depth appreciation of cul-
tural issues, perceptions and the different characteristics of specific markets. Combining knowledge of the markets and good understanding of the individual customer and his needs works, BOV Trade Finance Centre has been
named the Best Trade Finance Bank by Global Finance for four years in a row. For further information about the BOV Trade Finance Centre, please contact BOV Customer Service Centre on 2131 2020.
Sleep apnoea’s short to mediumterm symptoms include chronic fatigue, mental confusion and lower testosterone count, which reduces libido and associated erectile dysfunction but is also linked to many other serious conditions if left untreated over the long term. OSA can in fact be a contributing factor for hypertension, stroke, diabetes, heart disease and ultimately,
heart failure. Continuous Positive Airway Pressure (CPAP) is the most effective and non-invasive treatment offered to OSA sufferers. It is designed to stop the air passage from narrowing or collapsing during sleep by acting as a splint. Contact Technoline on 2134 4345 or e-mail admin@technolinemt.com. www.technoline-mt.com
Problems sleeping? Obstructive Sleep Apnoea (OSA) is a common and debilitating condition, and can affect people at any age, although it is most prevalent from middle age onwards. In OSA, the upper part of the air passage behind the tongue, narrows and often blocks during sleep causing an interruption to breathing. It is characterised by loud snoring with episodes of silence. Occasional brief obstructive events are harmless and are quite common in a normal adult. However, frequent brief awakenings destroy the normal sleep pattern and severely disrupt sleep. This prevents the sleeper from enjoying sufficient deep sleep to feel refreshed and energetic the next day.