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Malta - a natural choice for the financial services industry
The qualities of our regulator, our regulatory regime, and the level of service that we offer as an industry have been repeatedly lauded by international clients who have set up in Malta.
With some of the safest and most liquid banks in the eurozone, Malta is establishing itself as an international banking centre and hub for finance in the Mediterranean region. Rapidly growing and dynamic, Malta-based banks currently hold over €30 billion in deposits. Over the past decade or so, the banking sector has transformed itself from one having four retail banks serving the local population to a reputable international banking centre. This influx, which includes several leading banking groups, has added dynamism to Malta’s thriving financial services industry, and the expectation is that many other banking institutions will follow this lead.
Malta’s strong banking sector has long been the country’s backbone, supporting the growth of various other sectors. Capital buffers retained by local banks are among the highest in Europe, and Maltese banks have consistently returned solvency ratios that are almost double the EU average. Malta has seen a significant transformation in its banking sector over the last decade, from a tightly controlled publicly owned sector to one of liberalisation and foreign ownership. The country has attracted some of the most highly respected names in institutional finance to establish operations in Malta and use the country as a strategic launch pad for future expansion into Europe, Africa and the Middle East. The Tier 1 regulatory capital of the domestic banking sector sits at 11.8% (June 2014), which is almost double the required rate set by the Basel III accord.
Malta's financial sector was featured in the European Central Bank's (ECB's) comprehensive review of Europe's largest banks, including the European Banking Authority's EU-wide stress test, released in October 2014, which had shown that Malta's banks to be substantially well-capitalized.
The report commented positively that at end-October 2014, the deposit-to-loan ratio in the banking sector was 151%, remarking that Malta's banking system has been historically deposit funded, and as such, remarks no specific risks in the financial sector.
Commenting on the general economy, the report noted that Malta's economic growth prospects remain strong relative to the Eurozone, with the ratings being supported by the agency's view of Malta's fairly strong institutions, its resilient economy, and its expectation of further fiscal consolidation.
On July 10, 2015, Standard & Poor's Ratings Services revised its outlook on Malta to positive from stable, noting the likelihood of an upgrade within the next 24 months.