Financial Services: The armageddon that never came

In the aftermath of the FATF’s decision to place Malta on the list of jurisdictions requiring additional monitoring, many from the Opposition benches had composed dirges for our financial services sector.

Chief amongst them was Jason Azzopardi, who continuously posted on social media about how because of corruption there was an exodus of financial services firms from the island.

Various parliamentary questions were made to decry the ineptitude of Government failing to stem this tide, and decrying the end of Malta’s financial centre, so judiciously established by the previous Conservative administration.

It was therefore obvious that the release of the latest MFSA statistics on the number of licenses was being awaited with some trepidation. But this data suggest that the predicted Armageddon never came.

At the end of 2021 there were 74 credit or financial institutions, up from 73 in 2020. In 2012, when Malta was not corrupt and Honourable Jason Azzopardi was in office, there were 50 credit or financial institutions. 50% less than today.

At the end of 2021 there were 74 credit or financial institutions, up from 50 in 2012.

Then again, credit and financial institutions are fairly big entities. It might take them time to up and leave. So let us look at other players.

The number of insurance undertakings at the end of 2021 stood at 71, up from 68 in 2020. In 2012, there were 58 licensed insurance undertakings, a fifth less than today.

If one had to look at the number of licensed investment services firms, at the end of 2021, Malta had 148, up from 147 a year earlier. In 2012, there were 113, a quarter less than today.

Try as much as one might, there is no evidence of any widespread flight from Malta’s financial centre.

But wait, in 2021 there were 75 collective investment schemes or notified alternative investment funds who surrendered their licence. Surely that is what Honourable Jason Azzopardi was alluding to. Well, in 2020 there were 118 surrenders of license. In the golden days of 2012, when the number of licences was far lower than it is today, there had been 94 surrendered licences.

The number of company service providers was 216 at the end of 2021. In 2020 it was 171.

Now one could maybe argue that maybe argue that without the FATF decision, the financial services industry could have expanded even faster than it has did in 2021. But the fact of the matter remains that in 2021 the industry is larger than it was in 2020, despite the triple hits of pandemic, BREXIT and FATF.

Despite everything it remains between a fifth to a half larger than it was in the supposedly golden days of 2012.

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