The Business Observer Newspaper 11th February Issue by Content House

INTERVIEW

Issue 44

February 11, 2016

Distributed with Times of Malta

MGA could be sued for damages by Uniq Group Vanessa Macdonald The Malta Gaming Authority could in theory be sued by the Uniq Group for damages for loss of business if cleared of charges of illegal gambling, association with a Mafia organisation, money laundering and tax evasion. The authority had suspended the group’s six licences in Malta after an international arrest warrant was issued last July for its directors, who have since been extradited to face trial. In other jurisdictions, the law allows the regulator to put the company and its assets into the hands of a trusted administrator until the investigations and legal procedures are concluded. Should the owners be cleared, the administrator would then return the assets. However, the law in Malta does not envisage this set up, and this is one of the clauses being considered in the new legislation for the gaming industry currently being drafted, authority executive chairman Joe Cuschieri said. The shock disclosure about the alleged Mafia links was a “nightmare” for the gaming authority, although Mr Cuschieri said that it was important to understand that the alleged crimes – which took place in Italy – were serious enough for it to take prompt action, suspending its licence,

extraditing its directors and seizing its assets. “It was a secret investigation, going on for a few years. Arrest warrants were issued and six of those involved were associated with the Maltese licensee. The police executed the warrants and we immediately – since they were facing such serious accusations – reviewed their ‘fit and proper’ status as this had been compromised. We collaborated with the Italian regulator and police and were very swift in our reaction to the situation,” he said. Mr Cuschieri reassured The Business Observer that all the official documentation submitted for the licences was sound and that the due diligence done before it was set up in 2010 was comprehensive. “We did not overlook anything; far from it. The Italian regulator said the same thing about the operations in Italy: they did not find any reason to withhold licences. They had an excellent record with us, doing everything by the book. We never had any regulatory issues with them over the years and they did not commit any crime in Malta. “Clearly there is always room for improvement but it is not reasonable to assume that any system is always 100 per cent fool proof 100 per cent of the time. You are talking about people here and very complex systems. But in this case, I can say with hand on heart that we found no shortcoming from our side.

Malta Gaming Authority chairman Joe Cuschieri spoke two years ago about future-prooﬁng the sector – and legislation is due by summer which will make a huge diﬀerence. see pages 11 and 12 >

NEWS Emirates announced that it was dropping its Cyprus stop on the Dubai route but two weeks later changed its mind and will ﬂy there twice a week. But it has not really explained either the ﬁrst decision or its reconsideration. see page 6 >

NEWS

STAFF ON BREAK AT THE UNIQ GROUP OFFICES AT THE STRAND, WHERE THEY ARE STILL WORKING FOR A ROMANIAN-LICENSED SUBSIDIARY. PHOTO: CHRIS SANT FOURNIER

“Nevertheless we are looking to see where we can tighten up the system even further. I can confirm that internally we made a lot of changes which will reduce risk substantially,” he said. Could it happen again tomorrow? He admitted that criminals are often a step ahead and that the crimes become ever more sophisticated. “I cannot give a guarantee that it will never happen again, just as other regulators have said. The risk appetite of the authority is understandably very low at the moment but we do not want to become unfair, and put obstacles in the way

of those who genuinely deserve licences. You have to strike a balance using the right risk-based approach. The dilemma for the authority was how far to take its reaction, he said, noting that one of the operators was still active in Italy as it was felt by the regulator there that it would be more harmful if it ceased operations instantly. “The ‘fit and proper’ test was compromised by the European arrest warrant but should the company be put out of business and the employees lose their livelihood? Continued on page 3

e MFSA is launching an innovative framework for alternative investments which will regulate the manager rather than the fund itself. see page 6 >

OPINION e new Rector can have a signiﬁcant impact on the economy through the way he or she views the University of Malta’s ties with industry and research, Philip Von Brockdorﬀ explains. see page 15>

e Business OBSERVER

| February 11, 2016

NEWS

Union seeks to sign Banif agreement before sale The Malta Union of Bank Employees has been pushing to get the collective agreement for Banif signed – before the bank’s acquisition goes through. Sources said that the negotiations were concluded some time ago and that all that was pending was the management’s signature. The Portuguese bank has been up for sale for over a year, as its parent company was forced to sell its overseas assets as part of the country’s bailout. However, its workforce of 160 has so far held out and very few staff have left, the sources said. It was announced a few weeks ago that Banco Internacional do Funchal reached an agreement to sell its 78.6 per cent shareholding for €18.4 million but no information has been given about the acquirer. Nothing has been said by any of the other Maltese shareholders about what they intend to do with their shares, split equally between Mizzi Capital Projects, PG Holdings, SAK Ltd and Virtu Investments, but other sources said there were no indications that they intended to sell. The identity of the purchaser is important as it would give a clue as to their intentions. “Do they want to increase Banif’s share of the market? Do they want more staff? Do they want to pursue the retail branch strategy? All that has yet to be revealed,” the sources said. Irrespective of that, the MUBE clearly wants to ensure that the workforce is protected by the collective agreement it has negotiated with the present management, rather than having it subjected to pressure from new owners once they take over. “The agreement would ensure that, if there is a transfer of business, it would have to be lock, stock and barrel. “Having said that, the new owners must be aware of the collective agreement as it would have formed part of the due diligence carried out prior to the acquisition. And they must be aware of where the union stands on it,” the sources said. “If the acquirers are genuine in their approach, they would want to buy a going concern and, if they are happy with the performance of the bank, then I don’t think they would change things just like that.” Banif Bank started operations in Malta in 2008. It has established a retail network of 12 branches in addition to developing three corporate and business banking centres. In 2014, the bank registered a profit before tax of €1.4 million (2013: €0.3 million), with assets of €619 million.

BANIF BANK STARTED OPERATIONS IN MALTA IN 2008. PHOTO: DARRIN ZAMMIT LUPI

Workers protesting continued from page 1 “The risk of being sued is there. This is why we are considering, in the new legislation, the option to put a company into administration so that operations could continue. Technically, the law does not allow us to do this now.” The Uniq Group in Malta listed 42 employees in its last annual report, filed in 2015 for financial year 2013. At the time it closed, it was reported to have around 100, a fifth of them Maltese. In 2013, the company reported a pre-tax profit of €765,000 from revenue of €38 million. The directors paid dividends of €1.74 million. The group is still running back office operations from its office on The Strand, Sliema, for a Romanian-licensed subsidiary, according to Mr Cushieri. Twenty employees staged a protest outside the Gaming Authority offices in Mrieħel last autumn, complaining they had not been paid since June. Mario Gennaro, the alleged mastermind behind the Mafia scheme, was among the six Italians extradited to Italy from Malta. They were among 128 people listed in the investigation into money laundering by the Calabrian mafia, known as ’Ndrangheta. Hard cash obtained through illegal means was allegedly recycled through ‘legitimate’ gaming outlets in Italy, Malta and other countries. The Italian police seized assets worth €2 billion and issued 41 arrest warrants during the raids. Among the targets were 1,500 betting shops, 82 gambling websites, 45 Italian companies and 11 foreign firms, as well as “innumerable” property assets, the financial police said. Apart from the firms run from Malta, two were in Spain, two in Romania and one in Austria. See rest of interview on pages 10 and 11.

MeRck day iin MaLTA ! ! # #

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!!!

e Business OBSERVER

February 11, 2016

NEWS

Mcast registers 1,100 students as apprentices Mcast has over 1,100 students registered as apprentices, a scheme it took over from the Employment and Training Corporation just over a year ago – but it is already planning to extend the scheme to higher vocational levels. Silvio De Bono, the president of Mcast’s board of governors, said the current scheme covers levels three and four – students at Mcast Technical College – but will now be extended to internships at levels five and six, following degree programmes at Mcast University College.

“It is becoming a problem to recruit students in agriculture, woodwork, tile laying, masonry, ironwork and so on. Industry is not attractive any more.”

MCAST by numbers – 2014/15

3,413

“Next year we will add students at level seven – the masters programme,” he said. Mcast reported at a recent conference that there were 710 apprenticeship vacancies in various sectors. The adoption of the apprenticeship scheme is one of the three main pillars of the three-year strategic programme outlined by the new board, with another important milestone being the development of all the courses in-house, with Mcast as a self-accrediting institution. When Mcast was set up, it offered both local and foreign programmes such as BTec and, although 3,203 of 6,505 students registered for foreign awarding bodies in 2014/15, 129 courses offered were developed internally out of the 183 courses offered that year. The third development will be to offer students cross-curricular activity as from next year. “Students could, for example, major in agriculture but minor in business, or major in design and minor in IT,” he said.

Dr De Bono is clearly satisfied at having been able to deliver on the plan but there are still worrying trends, he warned. “It is becoming a problem to recruit students in agriculture, woodwork, tile laying, masonry, ironwork and so on. Industry is not attractive any more. I believe that this might be due to parents’ influencing their children to consider other areas but even though we are moving towards a service industry, it doesn’t mean that we do not need skills in the manufacturing industry,” he said. Another concern is the skills gap, which he see as being down to the poor retention of students after level four: only a quarter of students graduate at levels five or six. The board of governors is currently working on the next three-year plan and is also expected to announce that it broke even in 2015 – after inheriting a deficit of €1.1 million – with its Mcast Gateway to Industry subsidiary, set up in 2008, generating surplus funds which will be used to kill off the accumulated debt of the past years.

New students applying

237

Foreign students, from 49 countries

183

Courses offered by the 10 institutes

New courses introduced

Percentage that graduate at levels three or four

Students who entered at level two among the 283 who graduated at level six

e Business OBSERVER

| February 11, 2016

NEWS

Emirates U-turn on Cyprus route Emirates has decided to reinstate a stop in Cyprus, just two weeks after it announced that it would drop it, giving no reason for this change of heart. The Dubai airline originally announced that as from March 1 it was going to fly five times a week to Dubai via Tunis, returning nonstop from Dubai to Malta. But it then announced that it would add two more flights a week, retaining the original Malta/ Larnaca/Dubai/Larnaca/Malta route introduced in 2005. The route was closely linked to the initial success of travel agency ROCS. In fact, ROCS launched an advertising campaign to Cyprus in The Sunday Times of Malta just a day before Emirates announced that the flights via Larnaca would be operated. The Emirates spokesman declined to comment on what the strategic interest was of a stop in Tunis, nor why the decision on Cyprus was reversed.

“Emirates plans its routes and network in accordance with what best serves our customers’ needs and what is commercially viable. Cyprus and Malta are important markets and we have decided to continue offering flights between these two points to fulfil the demand on this sector,” the spokesman said. “Adding Tunis as a stop on the circular route of DubaiTunis-Malta-Dubai is made on the same consideration of passenger demand and commercial viability.” If the sale of Air Malta shareholding goes through, Emirates may soon have to compete with rival airline Etihad which operates via Abu Dhabi. Emirates flies to 150 destinations while Etihad operates more than 1,000 flights per week to 116 destinations but has extensive codeshare agreements which give it a network of nearly 580 destinations, and over 25,200 flights per week.

EMIRATES FLIES TO 150 DESTINATIONS.

‘Innovative’ MFSA product regulates fund managers The Malta Financial Services Authority is about to launch a new investment framework which regulates the fund manager, rather than the fund itself. The Maltese framework for Notified Alternative Investment Funds (NAIFs) will be launched more or less concurrently with Luxembourg’s Reserved Alternative Investment Fund (RAIF), announced a few months ago, which was hailed by analysts as being “pioneering” and a “revolution”. MFSA chairman Joe Bannister is confident that the same will be said about the Maltese version, which will also benefit from passporting to other member states. “We believe that innovation is one of the key pillars of the financial services strategy for Malta, and we have said this several times. This framework builds on the innovation of past legislation and will be followed by other launches over the coming months,” he said. One of the key advantages of the new approach by regulators will be the speed

with which new funds can come onto the market, since they do not have to go through the scrutiny of the regulator. The MFSA is aiming to list the funds on its website within just 10 days. The NAIFs will only be available to qualified or professional investors. Any of the

structures allowed under Maltese law can be used as a NAIF, and managers in the EU and the EEA will be able to ask the MFSA to include an AIF on the website list in Malta. Third country managers will have to submit a request for the notification of the

fund once the country where they are established has been granted passporting rights in accordance with the Alternative Investment Fund Managers Directive. The framework can be used for new collective investment schemes but the MFSA has not yet said whether existing schemes will be able to switch to the new framework. Other details that will be keenly awaited will be what asset classes can be included in the framework as well as what diversification limits will be imposed. The MFSA will in due course announce all the details about the framework and how managers can qualify, but for now the emphasis is on letting the sector in Malta and overseas know what is in store, rather than losing the first mover advantage. The MFSA will be drawing up a specimen prospectus as well as other documentation to guide fund managers, which will clearly state that the funds are not regulated, emphasising the consumer protection measures that will underpin the new product.

e Business OBSERVER

| February 11, 2016

INDUSTRY FOCUS

Malta has lowest female self-employed level

Mothers’ employment rate compared to other women and fathers (people aged 25 - 49 years, 2013) 100 90 80

NAME: KAY VELLA Company: Spot On Connections Designation: Head of recruitment Women in workforce: 90% Females at decision-making level: 80%

70 60 50 40 30 10 0

Women with children less than 6 years old Women with no children Men with children less than 6 years old SK HU CZ EL EE BG IT MT ES FI IE HR RO

PL DE UK

EA-19

EU-28

% of population group

Only 19.6 per cent of the self-employed in Malta in 2013 were women, the lowest rate in the European Union, according to a recent report, a far cry from the one-third average for the EU as a whole. The highest rate was in Lithuania (41.6 per cent), followed by Latvia (38 per cent) and Luxembourg (40.3 per cent). Malta has a slightly lower level of self-employment than the EU to start with, just 12 per cent compared to the EU average of 16 per cent. And the educational levels of entrepreneurs differ from those in the EU, with three times as many Maltese having low levels of schooling as the EU’s 20 per cent average. The European Commission report noted that socio-cultural factors – such as gender stereotyping – have an adverse effect on women’s opportunities and choice to become self-employed, while the strong male orientation of business networks can also hold women back. In the UK, reports show that women also often face less favourable credit terms than men when starting a business. There is also a marked difference between women and men when it comes to part-time work. In the EU, females find it a much more suitable model, with a third working part time (Malta: 28.8 per cent) compared to one man in 10. Having said all this, although the gender gap in Malta is definitely shrinking, motherhood remains a major determining factor. There is a 15 percentage point difference between the employment rates of

LV FR CY BE AT LU PT LT NL SI DK SE

Source:: Labour Force Survey, Eurostat.

women with children aged under six and women with no children, and a 40 percentage point gap with men who have children aged under six (see chart above). A Eurofound study in 2014 gave important insight into what is holding women back: it said that an overwhelming majority of mothers would be willing to work if they could better choose their working hours. More than half of the inac-

tive mothers prefer to work parttime while most mothers and almost half of the fathers in full-time jobs would like to work fewer hours. Single mothers, on the other hand, would prefer to increase their working hours. A single mother needs to earn an above-average full-time wage if she wants to achieve a 50 per cent increase in the family income.

Are some sectors harder for women to break into than others? It might have been the case a decade ago, but in recent years there is a big increase in the demand for specific approaches, mind sets and team fit, rather than gender. How does a woman’s management/leadership style differ to a man’s?

There are many different management styles – coaching and developing, a firmer commanding approach, strategic internal promotions to increase loyalty and commitment levels – but I don’t feel these styles are limited to one gender or another. Does your company offer family-friendly measures? We are a very familyoriented business. We are flexible when it comes to ensuring our team has the right support and measures in place in order to have that work/home life balance. Many of our employees enjoy the opportunity to work from home, reduced hours and we even have plans in the pipeline to offer crèche facilities to our staff.

e Business OBSERVER

February 11, 2016

INDUSTRY FOCUS

Are some sectors harder for women to break into than others? One would find more male employees working in the primary and secondary sectors. The distribution of responsibilities and resources between men and women are socially determined, and can be changed through conscious social action, including appropriate policies for gender equality and well-designed development projects to help close the gender gap.

Name: DaNica Fava Company: Outdoor Living Designation: Managing director Women in workforce: 60% Females at decision-making level: 50% Are some sectors harder for women to break into than others? Though there are some sectors that are still male or female dominated, this is continuously changing. I believe that if a woman is determined and committed she can work in any sector she likes. Rather than sectors, I feel for women it’s more challenging to reach high positions in an organisation. In the last century we have seen great progress in women’s advancement in the workplace. However, there are still barriers – in society and corpo-

How does a woman’s management/leadership style differ to a man’s? I do not think that there is a difference in leadership style by gender. Leadership can and should be situational, depending on the needs of the company and the team. A leader should choose a leadership style with a calculated analysis of the matter at hand, the end goal and the best tool for the job. Making gender diversity a business priority can lead to financial benefits and help a company realise its full potential. STM Malta operates in the international pensions industry which is a young industry locally. Thus I also have the opportunity to contribute with other stakeholders in shaping the pensions industry in Malta.

rate settings – that prevent women reaching top-level management positions. How does a woman’s management/leadership style differ to a man’s? Though it all depends on the character of the person, women tend to be more caring and intuitive. When it comes to decision-making, women tend to adopt a more participative approach and are also more collaborative. As women we try to achieve a win-win situation, rather than just look at things as we want them. Does your company offer family-friendly measures? We all work on flexible hours so everyone can set his work timings according to his lifestyle whether it’s gym, sports or family. We also offer the possibility to do certain work from home.

Mothers at work as a share of mothers who were working before the arrival of a new child (average 2007-2012) %

Name: DeboRah SchembRi Company: STM Malta Trust and Company Management Ltd Designation: Managing director Women in workforce: 60% Females at decision-making level: 50%

100 At work the year of new child At work the year following new child

90 80

Name: FLeUR camiLLeRi Company: Antonio’s Barber Shop Designation: Managing partner Women in workforce: 30% Females at decision-making level: 10%

Are some sectors harder for women to break into than others? I do believe that some sectors are harder to break into than others, but when a women is determined to reach her goal, nothing will stand in her way!

60 50 40 30 20 10 0

LV AT HU CZ SK LU PL MT BG IT

EL ES FR SI DK CY BE PT SE NL LT UK

“Although the gender gap in Malta is deﬁnitely shrinking, motherhood remains a major determining factor.”

Name: emma DiacoNo Company: Emma Diacono Ltd Designation: Director Are some sectors harder for women to break into than others? There are two sides to the ‘selfemployed coin’ for want of better words – on the one side there is the added flexibility and the challenge of starting up something and working for yourself, on the other hand there is the lack of security and comfort of knowing that you have a secure wage as you would when employed. For some, this lack of security is simply a no-go.

The cost of living here in Malta is increasing, or many say we simply want more! Whatever the reason, for many the security of a known salary is not ‘nice to have’ but a necessity and in some cases being self-employed does not provide that tick in the box – especially in the early days as the business needs time to establish itself. You also never really get time off as a self-employed person – it’s your own time and business today does not wait for anyone! On the other hand, I think we can see an increase in entrepreneurship and many youngsters

How does a woman’s management/ leadership style differ to a man’s? There are good managers and leaders in both genders. Our President is a woman and an inspiration to all Maltese women. It’s who you are and your capabilities and not your gender. Does your company offer family-friendly measures? Yes, we do offer family-friendly measures. I have a big family of my own and believe that both husband and wife should share responsibilities, therefore this will effect females and males in a work place. I strongly agree with the new measures.

wanting to make their own mark. I would say this is even more true of the newer generation than it is of mine. So yes, I would expect to see the number of self-employed women increase. Another factor that in my opinion contributes to this is when a woman wants to continue to pursue her career and build a family. I feel that only a few companies offer ‘real’ flexibility and family-friendly measures and in general, as a nation, I believe we have a way to go as yet in terms of flexibility in employment. For this reason, many women look to start up on their own.

e Business OBSERVER

| February 11, 2016

INTERVIEW

PHOTO: CHRIS SANT FOURNIER

Legislation a ‘game changer’ for the gaming sector Two years ago, JOSEPH CUSCHIERI, the executive chairman of the Malta Gaming Authority (LGA as it was then) told Vanessa Macdonald that he was looking at ways to futureproof the gaming sector. New legislation should be in place by summer which will be a ‘game changer’, he said. What is happening with challenges over taxation – our competitive advantage? The tax issue has been brewing for some time and I do not personally think that Malta can reasonably expect to keep things exactly the way they are today. It is no different to when we were going to join the EU and there were international trading companies that would not fit into the onshore tax regime. We adapted, changed and thrived. Practitioners are already collaborating to find an alternative model which can work for Malta. I also believe that when there is a certain critical mass – as there is with financial services and gaming – it creates its own gravity and attraction. Gamers are attracted here because we have a sophisticated eco-system with the quality of service gaming operators need, including specialised lawyers, technical

specialists and robust data centres and other B2B service providers. One of the strengths of the jurisdiction is the stance that was taken in 2004 when the government declared that it did not believe in prohibition but in regulation, rolling out the framework we have today. Also we are an English-speaking country – which we take for granted but which is quite a plus for us. And of course there are fiscal incentives. The measures we take now, such as changes to the law, more efficiency in governance of the sector and so on, all raise the level in Malta and ensure we will continue to grow. Personally, the issue of fiscal incentives does not worry me that much. In fact, you yourself had an interview with an operator who said that tax may have brought the company to Malta but it is now just one of the many factors that keeps them here. I am not saying that there would not be some casualties but it won’t mean the end of the sector.

All this notwithstanding, the Prime Minister has made it very clear that any changes in fiscal legislation should remain the remit of the Maltese Parliament – as sovereignty was established in the EU treaties. However, at some point, the pressure to adjust tax regimes could pile up. Tax changes may require unanimity in theory but if the government were ever forced to use its veto, it would have to do so in a very measured way. The negotiations between the UK and EU could also affect us and, if it gets concessions, they would apply to all the member states… This is not a dark cloud looming. It is a challenge which needs to be addressed in a smart and pragmatic fashion. Two years ago, we did an interview where you referred to ‘future proofing’ the sector. One of the targets was based on a revamp of the legislation…

The new legislation is at draft stage and we started consultations with the relevant ministry. It needs to go through Cabinet and will be discussed with the Opposition. We are confident it will be presented to Parliament before the summer recess – no doubt after a lively debate on technical points in spite of the fact that both parties support it! We are talking about a completely new Gaming Act, the first after 12 years. The law as it now stands imposes certain duplication of compliance across gaming sectors. Some things are obsolete and need to be rescinded, and in some cases, procedures are too bureaucratic. And we cannot underestimate the technological developments that need to be catered for. Twelve years is an eternity in technology and we need to narrow the gap between technology and the law!

We will introduce new consumer protection clauses and simplify the licensing structure as at present you need a licence for each category/sweep of games. We want to propose two categories – business-to-business, or business-to-consumer – and what they call a ‘superlicence’ to cater for a group of companies. It would then be up to the operator to offer multiple platforms and a variety of games with a multitude of interfaces and we would just approve them as part of the licence. Our aim is to eradicate bureaucracy and be more agile. We screened all the legislation in force to assess changes required both horizontally and vertically to eliminate inconsistencies. And there is also the transitory period for integration of current licensees to the new regime: we aim to do it with minimal impact. Let me be very clear on this: the legislation is a game-changer,

e Business OBSERVER

February 11, 2016

INTERVIEW

CASINOS HAVE TURNED MACAU INTO A TOURIST HAVEN – BUT GAMBLING IS BANNED ACROSS MUCH OF ASIA

GAMING BY NUMBERS even at an international level. It will help to raise our jurisdictional profile over that of other jurisdictions as being an innovative and very forward-looking regime. This will involve a lot of work internally to adopt a proper riskbased approach, flexible on some things but tighter on others. We will not ask for things just because that is the way it has also been done but only because it will address a risk or because it will help to define an outcome. In order to maintain that agility, we will also insert a review clause so that we can change the requirements if anything is not working. We want to empower the authority to be able to make the necessary tweaks and to regulate at the same dynamic pace as the industry. Why did the authority move to Smart City? The implementation of the 4th Anti Money Laundering Directive will have to be in place by July 2017 and we want to be among the first countries to enact it. But it will mean a lot more work and a lot more resources. It is much more onerous on the operators – but also on the authority. We had already outgrown our offices in Mrieħel and rightsized the MGA to regulate such a lively sector. We now have 140 staff and here we will be able to grow to 160 staff – what we anticipate that we will need. Smart City also provides us with other resources: rooms for training, meetings and press conferences; and video conferencing facilities for example. We also wanted to make a statement. This is a cutting edge industry and we needed an office that reflected this. You believe that Digital Games of Skill with Prize will be a key new sector. As soon as we issued the position paper – which will be part of the new legislation – there was considerable interest expressed,

including from some of the big names in the sector who want to set up in Malta to target the European market. We are already speaking to operators on an informal basis – including at conferences and exhibitions – until the regime is in place and we can issue them with a licence. One of the main thrusts of the recent position paper was to clearly define the difference between games of skill and those with a prize, as this is what determines whether the consumer requires protection or not. Every game could have elements of both chance and skill so the definition is very important. Operators do not want to be in the same category as gamblers who rely on chance – but the current legislation does not allow us to make these assessments. Games like Candy Crush, which do not involve financial transactions, do not need much regulation so there is not much scope for setting up shop in Malta. But others will be very interested. Out of the things you mentioned two years ago, which you actually did was to allow casino licences for cruise ships. Was that a success? So far, two cruise lines applied for permits for all the calls of their ships. We introduced it just before summer, too late to affect the 2015 itineraries of 2015. The licence was since then promoted at the Miami cruise convention last year and Valletta Cruise Port has included it in the prospectus for this year so we expect to see more traction this summer. What is happening with gaming outlets? They are once again cropping up. There are now 43 licensed gaming parlours, all complying with the restrictions on where they can be located – how close to schools and places of worship, for example. We have not capped the

amount and will leave it to the market to find its level. We have also given the first licences for sports betting outlets, and also sport betting licences in casinos. I am a firm believer that the only way to kill illegal gambling is to offer players a regulated and protected outcome. They know that, if they are cheated in any way, they have no recourse if they go to an illegal outlet. We are already getting feedback that the amount of illegal activity is dropping as traction gains in the legal ones. You also spoke about trying to open new markets, such as in Asia. Has there been any progress? Many of the large countries in Asia ban one or more forms of gambling, but that might one day change. Even India is considering opening up an online gaming regime and there are changes under way in Africa and South America. These are fundamental changes, given the size of the population involved. My strategy is to build relationships so, if the situation ever changes, we would be a potential collaborator. This would mean that our operators would have first mover advantage offering services to people there. When we strike a bilateral agreement or memorandum of understanding, it is about establishing contact with that state to pass on the message that we can facilitate the entry of licensees. Also there are some grey legal areas and the importance of collaborating with the regulator then becomes of paramount importance for mutual interest. We are making preliminary contacts; at the ICE Gaming Expo last year we met various operators who looked at Malta as a potential place for establishment, bearing also in mind the unrest that there has been in Macau. The outlier is the US and, with regards to online gambling, there is no softening of their ban.

9 75 280

Percentage of Malta’s gross value added in 2014 New licences issue in 2015 – 60 per cent were to existing operators Total number of operators, most of whom have multiple licences for multiple platforms

e Business OBSERVER

| February 11, 2016

CASE STUDY

Converging interests “Nossa!” Melita employees would do well to learn this word – meaning “Wow!” – and a few other words of Portuguese as they may have much more to do in this country than they expected. This is one of the unexpected outcomes of Melita’s recent sale, announced last December, to Apax Partners, a French private equity firm, and Fortino Capital, a Belgian venture capital company, for an undisclosed price. Melita gave little information about the bids, and CEO Andrei Torriani only smiled when asked. “Let us say that there was substantial interest,” he said, noting that this was a vote of confidence for both the company and for Malta. “The bids came from a multitude of investors, ranging from big telco groups, investment groups and private equity investors to private investors, coming from diverse geographic areas spanning from North America to Asia.”

The ultimate decision was clearly about price but he stressed that Melita also wanted to find “a fundamental understanding of where the business can go”. Apax was an obvious choice. It has a track record of over €2.5 billion worth of investments in 200 companies and, over the years, it invested – and exited from – 20 telco companies, with another 15 currently invested in. “They recently invested in a cable operator in Portugal and there has already been some discussion on how the model we built here can be exported to Portugal and potentially other markets. I think that is quite exciting for Malta, for Melita and for its employees… I foresee that there will be Maltese spending some time in Portugal and vice versa,” he smiled. The eventual sale of Melita was always on the cards, par for the course where private equity is involved as they tend to liquidate their investments between five to eight years down the road when the investors’ funds – often

pensions – need to be paid out. The most important point, for Mr Torriani, is why the investors would have been interested in Melita, a company founded 23 years ago by entrepreneur Joseph Gasan, who is till now still its chairman. The telco went through a slump at one point but this year it is expecting €31 million in earnings before tax, up from €16 million seven years ago. “That is one of the reasons for the high level of interest, especially from private equity groups. They looked at what we are doing in Malta and saw it as the model of the future for telecommunications.” The model he talks about is based on the latest telco buzzword: convergence “Essentially all telecommunications traffic is becoming IP focused – going over broadband – and the successful telco providers are the ones able to transform not only their networks but also the services they deliver, in a way that makes cost-effective sense for the customers,” he said.

“I foresee that there will be Maltese spending some time in Portugal and vice versa” “Melita has a role to play in that process of moving services online. First thing we need to get right is the end-to-end delivery of services with a network to support it. This is why we made major investments in our billing and CRM capabilities in the last three years. We had some hiccups but people are beginning to see the tangible benefits, getting control of their services with the app that we rolled out last year for self management,” he said, adding that the new shareholders would also be aligned with this strategy.

e Business OBSERVER

February 11, 2016

CASE STUDY

Melita will also remain focused on the data colocation centre in Madliena, which is nearing capacity in its current format – but which has space to expand. Mr Torriani revealed that a major bank recently moved there, using it to connect with its operations across other European countries. One area that is also on the horizon is business services, which Melita already offers but believes it could expand, leveraging the new shareholders’ experience. “This is very exciting for Melita and Malta. It will help push forward the government’s initiatives to cement Malta’s standing for e-commerce and ‘Smart Island’ strategy. It will bolster efforts to diversify and be less reliant on the sectors that got Malta to where it is now,” he said. Of course, convergence is not only about the future but the present. One of the most visible aspects of this has been streaming, with Netflix’s decision to offer its content across Europe changing the pressures which until now led so many consumers to seek illegal ways to access content. Melita, which has its own movie channel, was not in the least concerned about the competition. Why should it have been? If it has its eye on broadband demand, then it suits it to have more and more people using broadband – and it has always tried to position itself as the provider with higher and more reliable speeds. The emergence of a legal way to access content means that Melita can now work with Netflix directly, although he did not give many details, beyond saying that they had been talking to them for over two years. “We are working with Netflix in terms of investment that Melita will make in additional capability to deliver its content in Malta. “We will make the hardware investment for them and they will monitor the end usage,” he said, pointing out that Melita already works with content delivery networks to host the most popular content in Malta. “This improves the quality of service tremendously and helps us to save on the cost of international carriage of that traffic. At the end of the day instead of spending on the route to bring that here, we can invest in the network capacity to support growing internet habits. “Broadband usage is growing 50 per cent per year, a very dramatic increase. The average Maltese user in Gigabyte terms consumes roughly two to three times the usage in the US and four to five times that in the EU. “A lot of that unfortunately is through illegal services. There is no morality judgement from our side. But clearly we cannot work with illegal providers the way we can with Netflix.

The people that are calling themselves service providers are essentially overpromising what they can deliver. They can be cut off from the source of content at any time. “Also, there are factors that inhibit them from offering a good quality service. For example, streaming services and peer-topeer files are predominantly hosted outside Malta. So when a lot of people are trying to use all these services all at once, there is an issue as the networks are generally in places that do not have the infrastructural capacity.” What impact will Netflix have on Melita More, its movie channel? He said the channel would continue but that it will require a re-think. “As a distributor of content, which is what we are, it forces us to take a look at Melita More and try to enhance the offering so that it does not duplicate what is available, because the Netflix library is quite vast – even though not all of it is available here yet. “They were also hampered by studio licensing and so on, just as we were. But Netflix pledged to rectify this in a very short space of time and I expect them to expand the content rapidly over the next year or two. “What is exciting is the European Parliament directive that by, 2017, geoblocking will be gone. For consumers this means they will be able to access anything there is online within the EU without blocking of transmission. This means you will be able to subscribe to sports streaming, Amazon in the UK and so on: there might be some restrictions but it will enable things that were never possible before. “That is great for us as it means that all the investment we made in convergence will open it to a wider context. People will no longer have to look for alternative means to get content. I predict very openly that within two years a lot of companies who call themselves service providers will not have a business case,” he warned. For this to happen, consumers would have to give up the receivers and boxes they bought to access illegal or irregular content – but he insists that many of them are inferior and uncertified. “The streaming products – set top boxes – are often not tested by any EU body. That is important as many of these boxes operate on protocols that are very aggressive. Many take as much capacity as they can and operate continuously, using capacity whether you are watching it or not. Factor in that we find many of these devices are infected with malware running in the background – exposing the people using these services to theft of their personal data as well as slowing down their connections.”

MELITA CEO ANDREI TORRIANI

One way for Melita to benefit directly would be to incorporate IP features into its own boxes, which he announced was already being done. “I don’t want to give too much away but it will mean more access to more video services, and more providers outside the Melita family. We already have a library of video, even though it is more limited than we want, a wide array of channels that people can watch anywhere – thanks to the high speed Wi-Fi network. They will improve and that is where the investment from the new shareholder will take us forward,” he said. One of the key selling points remains speed and Melita intends to roll out new packages in the near future which will match its customer segment profiles for broadband use, ranging from higher use to casual use.

“In 2014, we rolled out 250 Mbps, and we will in the very near future offer 500 Mbps nationwide. You would be surprised by the amount of demand – predominantly from businesses. “We take the speed for granted but Malta has overtaken many of the member states and we are up there with the Netherlands in the top tier. That is great for consumers and for attracting business to Malta. It is a competitive advantage just as the tax advantage is,” he said. At present, the bottleneck is not the offering but the devices involved, from modems to phone sets, which will be upgraded soon. “The chips in the modems we installed two years ago had a limit of 70-80 Mbps. The new generation modems can support up to 500 Mbps and in a laboratory up to 1 Gbps.” “Nossa!” indeed.

e Business OBSERVER

February 11, 2016

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

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Looking past the ﬁgures It is hard to work up a sweat over the European Commission’s Winter Forecast for the island. Real growth was 5.4 per cent in the third quarter and is forecast to stand at 4.9 per cent for the year as a whole, admittedly not the figures China and India have been reporting, but still quite a respectable pace – especially within the EU. Other performance indicators are just as heartening: low unemployment staying around 5.4 per cent for the year, export growth recovering, healthier deficit and debt levels, and inflation creeping back up to around its target of two per cent. The problem is that when the headlines are positive, quarter after quarter, apart from the dry, understated forecast becoming predictable and even boring, it risks pushing up to rest on our laurels. And there are few red flags in the forecast: a sharp decline in EU funds as a new programming period gets underway, for example, but even this was balanced out by the upside risk of more financing coming through the Investment Plan for Europe, and the long-awaited setting up of a development bank. There is only one line, buried deep in among all this feel-good stuff, that warns of potential trouble ahead: a downside risk should protracted weakness in emerging markets hamper the recovery of exports, “given Malta’s large exposures to trading partners outside the EU”. Alas, would that the risks were so easily summed up. We are a small island almost entirely dependent on the world beyond our shores. We are buffeted by the butterfly effect, the elegant part of chaos theory that explains why a small change at one end of a story can result in much bigger changes at the other. Take property: Malta went from having an oversupply that was worrying the sector to a focus on getting

foreigners to buy the surplus, to suddenly finding demand was growing for rentals, which prompted yet another flurry of purchases and developments to cater for it. And yet, no one has stopped to ascertain whether this bandwagon is already overloaded, and whether demand is already tapering off. Beyond our shore, we have to consider Brexit and sterling and their impact on our tourism market. We have to consider the price of oil and commodities. We have to consider Zika and the possibility it will negatively affect tourism – or that the panic will fizzle out after its 15 minutes of front page fame. We have to consider the impact of Irisl at the Freeport, mergers and acquisitions in insurance locally and pharmaceuticals internationally, and the setting up of free trade zones and new logistics operations. We need to cross our fingers that the new gaming legislation will truly ‘futureproof’ the gaming sector and that office projects will materialise sooner than later, before potential investors start to get frustrated. We have to pray that the discovery of possible Mafia links last year does not turn out to be the tip of an iceberg that could seriously tarnish our reputation. We have to pray even harder that ISIS and terrorism do not shed blood on our shores. We should be looking at previous European Commission forecasts, which flagged the aging population and the pensions gap, poor tax compliance and tax evasion, road congestion and energy dependency. Some things are being tackled but will the desired results be seen soon enough? The European Commission’s forecasts are but one way of checking the island’s pulse. We can only hope that economic stability does not turn out to be as solid as the concrete pillars at Mater Dei Hospital.

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BUSINESS OPINION

An economist’s viewpoint of the new Rector

Philip von Brockdorﬀ As we await the appointment of a new Rector at the University of Malta, it is worthwhile considering the relevance of this role in facilitating economic growth. The contribution of the university to the economy, through the education of graduates and through research and knowledge exchange, is the subject of much discussion and debate. However, it is sometimes overlooked that the higher education sector forms a core part of the economic infrastructure of the Maltese islands. As a relatively large enterprise in itself, the university is a major employer and it generates economic activity, interacts with other key sectors in the economy, and therefore contributes to Gross Domestic Product (GDP). University’s effectiveness in generating economic activity has been all the more important in the economic growth we are experiencing. Not all aspects of a university’s contribution to the economy can be readily measured. It is quite impossible to measure, for instance, the value of the university’s collaboration with business or the

impact of new ideas generated by its academics and graduates. It is opportune, therefore, to present a timely reminder of the impact Malta’s university has on its economy at a time when a new Rector will shortly be appointed. I shall not dwell on the qualities needed to fulfil this role. The competences were comprehensively summed up by the Minister of Education and Employment in a recent Times of Malta article on the subject. There is also recognition of the challenges but also the opportunities that a new Rector needs to identify, especially in the field of science and post-doctoral research. I attended one of two consultation meetings on the future of university held last month. These meetings were addressed by the Prime Minister and the Minister of Education and Employment. Such an event would be quite impossible to organise in larger countries. The presence of the Prime Minister and a senior Cabinet minister, however, highlights the considerable attention the role of higher education in our society and its potential contribution to economic growth continues to attract. The outgoing Rector and his team have shaped much of what has changed at university. Ten years on, it is quite relevant to debate the purpose and nature of higher education, the type of university society wants and, in particular, how university ought to relate with the government in a state of affairs where other institutions, both public and private, also play a key role in Malta’s higher education landscape.

THE CONTRIBUTION OF THE UNIVERSITY TO THE ECONOMY, THROUGH THE EDUCATION OF GRADUATES AND THROUGH RESEARCH AND KNOWLEDGE EXCHANGE, IS THE SUBJECT OF MUCH DISCUSSION AND DEBATE.

“e new Rector will assume the role at a time of increased internationalisation of higher education” Indeed higher education policy is assuming greater importance with increased financial resources being allocated to both university and Mcast. With new opportunities for investment in the private sector, the next Rector will probably need to lobby much harder in future for increased spending by government at the University of Malta. Though much has changed at university since Prof. Juanito Camilleri took over as Rector, two key factors persist: university’s heavy reliance on state funds and the stipend system. Both represent significant cost to the taxpayer and it will be the new Rector’s responsibility to ensure

that the university and its graduates continue to provide a fair return on the investment. The Employability Index compiled by the Ministry of Education and Employment and the Emloyment and Training Corporation reveals reasonable levels of employability across faculties and very high levels in engineering. This notwithstanding, the university needs to regularly review both the content and structure of its teaching catering both for Maltese and international students. Though research is critical for university’s reputation – especially internationally and for the dreaded ranking of higher

education institutions – the importance of the university as a strong teaching institution cannot be downplayed. A more researchoriented university cannot be achieved at the expense of curriculum content and structure and of internal quality assurance. And the new Rector will need to continue expanding university’s research programmes in science, technology and innovation. Research is not only critical to the economic and social development of society; it is also critical to the mission of the University of Malta. Numerous opportunities for research exist already but climate change and its impact strikes me as the most obvious. The new Rector will assume the role at a time of increased internationalisation of higher education. This presents new opportunities for university not least financial. The international student market is expected to grow in the future and university will need to double its efforts to attract more international students despite increasing management and academic challenges. It is somewhat surprising that, as one of the oldest universities in the Mediterranean, there are fewer international students from the Mediterranean number than from other parts of the world. Whoever is appointed Rector next month will no doubt be aware of the critical role our university plays. That contribution will need to be further enhanced in the years ahead. Philip von Brockdoff is the head of economics at the University of Malta.

e Business OBSERVER

February 11, 2016

APPOINTMENTS

Fimbank appointments Fimbank has appointed Howard Gaunt as group chief operating officer and Michael Davakis as senior vice president and head of treasury. Mr Gaunt’s banking career spans 31 years in senior national and international assignments with Wells Fargo and Company, Citibank, Citicorp, Citigroup and Samba Financial Group. Prior to joining Fimbank, he spearheaded Wholesale Banking Group activities in the Abu Dhabi, Al Ain and GCC regions at Abu Dhabi Commercial Bank, the UAE’s third largest bank as measured by assets. CEO Murali Subramanian explained that the addition of a senior executive of Gaunt’s stature would prove invaluable in the bank’s efforts

HOWARD GAUNT

to reach sustainable profitability and grow its core operating businesses. Born in Austria, Mr Davakis started his banking career in Athens as an analyst for Dresdner Bank in 1997, before moving to Bank of America as treasury economist. He subsequently joined HypoVereinsbank on the credit and

MICHAEL DAVAKIS

project finance side before returning to debt capital markets at Dresdner Kleinwort Wasserstein, Frankfurt. In 2004, he joined the treasury of Piraeus Bank SA in Athens, promoted to head the treasury of Piraeus Bank Serbia in Belgrade seven years later.

New director at HSBC contact centre e HSBC UK Contact Centre Malta (HBEU) has welcomed Robert Vaughan as its new contact centre head, as it prepares to celebrate 10 years of successful operation in Malta. Mr Vaughan began his career at HSBC UK Contact Centre Swansea in 2004 as a customer service associate and has since then helmed 10 diﬀerent roles within contact centres working all over the UK and India.

Under his leadership, the focus at HBEU will be to create better workplace for the employees, who would be able to choose among a number of pathways to expand their career. HBEU is the best paying contact centre on the island in addition to oﬀering a range of workplace beneﬁts. More information may be obtained online at: www.hsbc.com.mt/careers.

Risk oﬃcer at Mapfre Etienne Grima has been appointed risk officer for Mapfre Middlesea. He is currently the chief risk officer for MSV Life and Growth Investments Ltd, and will be retaining these positions, so that there is one risk officer for the local Mapfre group companies. His appointment follows that of Josianne Briffa as compliance officer, as part of the same strategy. Mr Sciberras has been a director on the board of Plaza Centres since 2013 and has worked with the Mapfre Middlesea Group since 2001.

New head at TBWA/ANG Julianne Grima is taking over from her father, Godfrey, as the chairwoman of TBWA/ANG. Mr Grima will remain an active member of the board. Ms Grima, a physiotherapist by profession, has worked with the company over two decades, returning in 2013 as director and chief people officer. CEO Ivan Filletti also announced that he would be leaving the company after three years there. His successor is in the process of being appointed.

e Business OBSERVER

| February 11, 2016

STOCK MARKET REVIEW

What has contributed to recent sterling weakness?

Edward Rizzo Edward Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd. Many Maltese investors who have exposure to the British pound as part of their overall investment portfolios may have noticed a sizeable decline in the value of sterling against the euro over recent months. The bull run since early 2009 from close to parity versus the euro was halted six months ago when, in mid-July 2015, the exchange rate reached a high of €1.4399 for every £1 (or £0.6945 per €1). After a brief downturn over the summer months, it retested its multiyear highs in November but since then the value of the British pound slumped by over 10 per cent to the €1.289 level (equivalent to £0.7758). Given the importance of the performance of sterling for Maltese investors as well

as business owners and consumers in general, it is worth analysing the reasons for such a downturn in a relatively short period of time. Currencies are valued against one another and, therefore, the performance of a currency signifies relative strength or weakness against another currency. In this case, the movement of the sterling/euro exchange rate is dependent on factors affecting the UK economy as well as developments across the eurozone. The main influential factors which contributed to the recent volatility in the value of sterling are the performance of the British economy and expectations on the future direction of interest rates, as well as the uncertainty surrounding Britain’s membership of the EU. On the economic front, the Governor of the Bank of England (BOE) Mark Carney has played a central role in affecting

“e UK economy is now expected to grow by 2.2 per cent this year, from a projected 2.5 per cent in November” currency movements. In the summer, he signalled that the decision to raise interest rates which have been on hold at historic lows since March 2009, might come into focus “around the turn of the year”. With the market widely anticipating the start of tighter monetary policy in Britain similar to the US, sterling reversed its downward trend and strengthened once again until mid-November. However, the Governor of the BOE backtracked somewhat over recent months as plunging oil prices and slowing global growth stemming from a deteriorating

Chinese economy are weighing on inflation expectations across the UK. This began to lead to a decline in the value of sterling. In its latest monetary policy meeting held last week, the BOE cut its forecasts for economic growth, inflation and wages due to “sustained financial market turbulence”. Mr Carney stated that “global growth has slowed again over the past few months, as emerging economies decelerated and the US economy grew less than expected”. The UK economy is now expected to grow by 2.2 per cent this year, from a projected 2.5 per cent in November. Economic growth in

e Business OBSERVER

February 11, 2016

STOCK MARKET REVIEW

Sterling / Euro Exchange Rate

for the period 01 January 2013 to 09 February 2016

1.50 1.45 1.40

EUR per GBP1

1.35 1.30 1.25 1.20 1.15 1.10

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Jan-13

1.00

Apr-13

1.05

Source: Thomson Reuters

2017 is expected to be 2.4 per cent compared to an earlier forecast of 2.7 per cent. The BOE now expects an average inflation rate of only 0.8 per cent this year climbing to the two per cent target in 2018. While the BOE seemed to signal that interest rates would now remain on hold until next year, some economists are expecting the first rate hike in August 2018 while others have gone as far as forecasting that there will be no rate hikes until the end of the decade (i.e. 2020). Such anticipations from these economists is what led to a further weakening of sterling against the euro since last week. Central banks all over the world are deliberating how to handle slowing consumer prices. The US Federal Reserve has signalled it may delay a further rate hike which was anticipated to happen next month while the European Central Bank is widely considering fresh stimulus at its next meeting on March 10. Moreover, since the recent surprise decision by the Bank of Japan to push interest rates into negative territory, there was speculation that the BOE would also consider such a move. However, at last week’s monetary policy meeting, BOE officials quashed talks of a rate cut in the near term as they argued that keeping inflation within their target would require tighter monetary policy (i.e. higher interest rates) over the next three years.

“If the British people were to vote to exit the EU, a new form of trading relationship with the EU would need to be found.” However, Mr Carney stated that the BOE “stands ready to take whatever action is needed, as events unfold, to ensure inflation remains likely to return to target in a timely fashion”. In his letter to the Chancellor of the Exchequer George Osborne, he also said that should “downside risks materialise, market expectations of the future path of interest rates could adjust further to reflect an even more gradual and limited path for bank rate rises than is currently priced”. The value of the British pound will remain very sensitive to such statements until such time as the future direction of interest rates becomes clearer. In addition to the global headwinds and the impact on the British economy, the other important factor affecting the value of sterling is Britain’s upcoming vote on EU membership. Although upon being reelected in May 2015, Prime Minister David Cameron vowed to hold a referendum by the end of 2017, this is now likely to take place by summer 2016. So far the government has not yet managed to conclude a

deal with the EU although this is possible by the end of February. If the British people were to vote to exit the EU, a new form of trading relationship with the EU would need to be found. The uncertainty over what this relationship would be, and the length of time to reach a final deal, could lead to heightened uncertainty which will negatively impact the value of sterling. The US investment bank Goldman Sachs claims that the British pound could crash by 20 per cent if the UK votes to leave the EU. Another US financial institution, CitiGroup, warned that “the effects of Brexit, if it happens, are likely to be large and painful in economic and political terms, both for the UK and the overall EU”. Movements in sterling should be of interest to various operators in different sectors of the local economy. Among the most important, a weakening of sterling is not necessarily good news for tourism operators including the local hotel industry. The UK market remains the largest source market for Malta and a weakening currency makes a holiday to an EU destination more

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

costly for British travellers. Thankfully, this does not seem to be having an effect on Malta as recent statistics continue to indicate an increase in overall tourism numbers including from the British market. On the other hand, a weakening sterling may be beneficial for other sectors of the economy. The first that comes to mind is car importation, more specifically related to second-hand vehicles from the UK. The recent weakness of sterling is good news for such operators as British imports will be more competitive and local consumers will be more prone to favour a second-hand British import. Importers of other merchandise from the UK including foodstuffs would very much welcome the recent decline in the value of the British pound. Notwithstanding the recent downward trend, continued volatility in currency markets is likely to persist especially in the coming months ahead of the referendum. Apart from the factors impacting the British economy including the very important referendum, news from the ECB will continue to impinge in a significant way on the value of the euro against all major currencies including sterling. Wide movements in currency markets have numerous implications for investors, businesses and consumers and hence there is a need to continuously monitor developments and to take appropriate action in a timely manner.

e Business OBSERVER

February 11, 2016

BUSINESS UPDATES

Greener ﬁnancing now possible with the BOV Eco Loan Following a recent update of its BOV Eco Loan, Bank of Valletta has made green financing broader. The BOV Eco Loan can now also be used to finance the purchase of new motor vehicles, as long as their CO2 emission levels are below 100g/km or 130g/km, where the applicant is concurrently scrapping another motor vehicle under the Government Car Scrappage scheme. One may also apply for this loan to purchase motorcycles, electric or hybrid motor vehicles, or to convert motor vehicles to run on autogas. The BOV Eco Loan is aligned with the bank’s corporate responsibility, through which it seeks not only to adopt environmentally-friendly practices itself, but also to encourage and reward customers who make environmentally-friendly choices. BOV Eco Loan financing can be obtained for amounts starting from €500 up to a maximum of €40,000. Generally, the repayment term is of seven years, however, it may be extended to eight years for loans granted to purchase motor vehicles with low CO2 emission levels, electric cars or hybrid cars. The BOV Eco

Loan also features a discounted interest margin and carries no processing fees. Further information regarding the BOV Eco Loan as well as the relative terms and conditions are available from bov.com. One may also call at any BOV branch or contact BOV Customer Service Centre on T: 2131 2020. Bank of Valletta p.l.c. is a publicly limited company licenced to conduct banking and investment services business by the Malta Financial Services Authority.

Excellent turnout for Seabank Group’s recruitment day Hundreds of applicants flocked to the recruitment open day organised by the Seabank Group, to find out about careers at db Seabank Resort, db San Antonio Hotel, db Catering + Events, Hard Rock Café, Tunnynet Complex, and Pearl Spas, in the wake of the group’s investment of more than €90 million over the past four years. Vincent Degiorgio, director of db Hotels + Resorts said: “The response we saw during our recruitment day is clear evidence of the sustained trust in our group and in its ability to offer good career opportunities. We will continue to work hard to deserve this trust and to continue to offer jobs which translate into excellent client service.”

“As the volume of visitors to our islands continues to grow steadily, so will the opportunities for employment in the tourism sector. Hotels are an important source of employment in this country, both in terms of number of jobs and their range and variety,” said Paul Bugeja, CEO of the Malta Tourism Authority. Tony Zahra, president of the Malta Hotels and Restaurants Association, added: “The Seabank Group is a very significant player in the hotel and hospitality industry and has shown vision and enterprise in delivering hundreds of jobs and substantial investment in Malta.”

Ganado Advocates’ third annual Banking and Finance Law seminar Ganado Advocates, in collaboration with the Malta Bankers’ Association, will be organising its third annual Banking and Finance Law seminar. Conrad Portanier, head of banking at Ganado Advocates, commented that the firm was very proud to have secured the presence of Denise Bauer, a senior lawyer from the internationally renowned English/German law-firm Freshfields Bruckhaus Deringer for this event. Dr Bauer has a wealth of regulatory experience and will be sharing her insights on the assessment of the board of directors of banks under the new European rules. In addition, a panel of leading in-house legal counsellors, moderated by Leonard Bonello, will also discuss the evolving role of in-house counsel and the challenges they face in reconciling risk management with a business-friendly approach in an overlyregulated environment. “The choice of subjects is very topical to banks and financial institutions and the seminar will be an excellent opportunity for lawyers and officials to share their views on key issues,” Dr Portanier said. The seminar will be held on February 25, between 1.30pm and 5.45pm at the InterContinental Hotel. Places are limited and on a first-come first-served basis. For registration enquiries, please e-mail cborg@ganadoadvocates.com.

Fexserv Financial Services – growing better and stronger Fexserv Financial Services Ltd are enhancing a number of areas to better meet and serve all their clients, including a call centre facility with the latest technology. In addition, they are beefing up their Compliance and Security Department with new staff to sustain their healthy customer-centric and compliance culture to generate even more swift responses in dealing with more demanding regulatory requirements. Together with these enhancements, Fexserv has strengthened their Foreign Exchange and Treasury Department with the addition of James Marston, who for

many years occupied a senior position within the foreign exchange division of Bank of Valletta and who was responsible for the overall position of the bank in the foreign exchange markets, notably spot and forward trading. His enrolment has brought a wealth of specialised knowledge and experience gained at the cutting edge of the foreign exchange markets with one of Malta’s largest financial institutions. Fexserv trusts that his knowledge will help contribute to improve the company’s position in the forefront of the FX market and trading.

e Business OBSERVER

| February 11, 2016

BUSINESS UPDATES

Singapore’s New Silkroutes Group forms joint venture with New York-based CG Capital Partners Singapore Exchange-listed New Silkroutes Group Ltd (NSG) is teaming up with New York-based CG Capital Partners LLC (CG Capital) to offer fund management

services, including sophisticated financial products and dedicated asset-class specific funds to Asian investors. New Silkroutes Capital Pte Ltd, NSG’s wholly-owned Singa-

pore-based investment arm, and CG Capital formed New Silkroutes Capital LLC, a joint-venture asset management firm that will invest in a portfolio of dollar, euro and RMB-

denominated structured products, which include equity-linked derivatives and equity-linked indices. New Silkroutes Capital Pte Ltd owns 70 per cent of the New York-

headquartered joint venture, while CG Capital owns the remaining 30 per cent. Helmed by seasoned CG Capital partners with decades of Wall Street experience with major international investment banks, the joint venture will also raise and manage funds that can buy additional assets and enter into transactions to finance projects. NSG, previously known as Digiland International Ltd, said the entry into fund management is part of a strategic shift for the Group following its exit from the SGX Watchlist in November 2014. New Silkroutes Capital LLC will target institutional and private wealth in Europe, the Middle East and North Africa, and Asia, particularly China. It will launch dedicated asset management funds for specific verticals or asset classes, including energy/ resource, healthcare, infocomm technology and real estate. It will also collaborate with banks and insurance companies in Europe and Asia to offer and launch private-label funds for distribution through established marketing networks in the key cities in which it operates. Sean Rice, managing partner of CG Capital, will be the managing partner of New Silkroutes Capital in the Americas, while NSG CEO Goh Jin Hian will chair New Silkroutes Capital LLC’s board of directors. “We are honoured to be joining New Silkroutes Group in this new joint venture, which underscores our interest and commitment to Asia Pacific,” Mr Rice said. “Asian investors not only have the appetite but are getting increasingly knowledgeable and keen to invest in more sophisticated structured products and a wider range of asset classes.” Mr Rice has nearly 20 years of experience building and managing structured products and derivatives businesses. As president of CG Capital Markets, he is responsible for business strategy and investment banking activities, as well as the origination, trading and distribution of all arranged capital markets products. “The joint venture is a major milestone for New Silkroutes Group’s business transformation. With experienced partners and access to global capital across key time zones, we are positioned to drive future growth of our business sustainably,” said Dr Goh. New Silkroutes Capital LLC’s principal place of business will be its midtown Manhattan location at 733 Third Avenue in New York, from where it will service non-US tax resident clients. For further information, contact New Silkroutes Group Limited on E: ipr@newsilkroutes.org or CG Capital Partners, LLC on E: inquiries@cgcapitalpartners.com