Banking 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 in Malta 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 financial services industry, and the expectation is that many other banking institutions will follow this lead.

Banking Activities in Malta

Banking in Malta 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 - A Robust Regulatory and Legislative Framework

Living up to its catch-phrase of ‘innovation through regulation’, Malta’s regulator has created an advantageous environment of efficiency and reduced bureaucracy for the benefit of international credit and financial institutions.

The Malta Financial Services Authority (MFSA) is the country’s single regulator responsible for issuing licenses and the supervision of credit and financial institutions. Its high regulatory standards are modelled on EU legislation and best practice, whilst at the same time allowing for the flexibility necessary in a modern and dynamic banking environment, without imposing undue bureaucratic burdens on operators. However, as from November 2014 the European Central Bank (ECB) took over the responsibility for banking supervision at top tier level, and the Maltese banking sector is facing tougher regulatory and capital requirements emanating from the implementation of the new European Union banking Legislation (known as CRDIV/CRR), which came into force at the start of 2014.

Maltese banks remain well capitalized, and have high liquidity ratios as well as sound, well diversified portfolios. Their funding is sourced mainly from customer deposits, and their prudent business model has enabled them to emerge largely unscathed from the turmoil of the 2008 banking crisis - The World Economic Forum’s Global Competitiveness Report 2014-2015 ranked Malta amongst the top ten countries insofar as soundness of the banking system is concerned out of 144 economies and 13th for strength of auditing and reporting standards.

Banking institutions in Malta are regulated by the Banking Act, which is founded on European Union legislation and is compliant with the Basle Core Principles. The non-bank financial institutions are regulated by the Financial Institutions Act. While Malta has the same regulatory standards as other EU member states, the country’s framework allows for the flexibility necessary in a modern and dynamic financial environment, without imposing undue bureaucratic burdens on operators.

Malta is ranked first in the timely transposition of EU internal market laws into national law. In 2010, the provisions of the Payment Services Directive, regulating payment institutions were transposed into Maltese law. This was followed by the EU Electronic Money Institutions Directive, regulating Electronic Money Institutions, transposed in 2011.

Malta - An Advantageous Business Domicile

Apart from its ideal geographical location, the benefits of EU membership and euro adoption, and a prompt, efficient and accessible Regulator, Malta offers many other advantages as a domicile for international banking business.

The island has a good source of well-educated people and a cadre of qualified professionals in law, accounting, taxation, IT and other disciplines required by the financial services industry. The workforce possesses good language skills – English is an official language – and a positive work ethic prevails.

Costs are also measurably lower than in other European centers, with salaries averaging one-third to one-half of the EU Level. Other operating costs are likewise competitive, and excellent office space and housing are available at reasonable rents.

The Maltese fiscal regime has also been one of the main drivers in creating an attractive investment environment. Malta’s tax system has been deemed by the European Commission to be compliant with EU non-discrimination principles, and with proper planning and structuring, investors can achieve considerable fiscal efficiency using Malta as a base.


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Benefits of Banking in Malta

  • Secure location for savings and assets
  • Around 70 double taxation treaties
  • The country's banking sector has been judged the 10th soundest in the world (out of 144 countries) -Global Competitiveness Report 2014-15 World Economic Forum
  • Diverse industry providing a wide range of services, including custodian banking, trade and project finance as well as specialist wealth management services