The Current State of Malta’s Financial Services Industry
Adriana Camilleri Vassallo is the Co-founder and recently appointed CEO of Francis J. Vassallo & Associates Group of companies in Malta. Founded in 1998, the company started as Francis J. Vassallo & Associates Ltd (FJVA) - a corporate services provider licensed and regulated by the Malta Financial Services Authority (MFSA). Since then, FJVA Group, together with its sister companies FJV Management Ltd and FJV Fiduciary Ltd, has branched out into tax, trusts, foundations, regulatory advisory services and yacht registration, amongst other services. FJVA’s vision has always been to become a one-stop-shop for clients whose international, multinational or multifaceted circumstances need a central advisory hub. Above all, FJVA prides itself in being a strictly independent firm run like a close-knit family business.
What led to the foundation of FJVA?
In 1998, my father, Francis J. Vassallo, had concluded his term as Governor of the Central Bank of
Malta in which he was instrumental in liberalising Malta’s economy and directing it towards EU membership. At that time, I was working with Coopers & Lybrand (now PwC) and my father had returned to Chase Manhattan Bank where he had previously worked for 25 years. My father truly believes in Malta’s role as a financial services centre and recognised the huge impact an EU membership would have on Malta’s economy. He, therefore, thought it an opportune time to return to Malta and start his own business. I, on the other hand, had been working with Coopers & Lybrand in the corporate arena, so he asked whether I would be interested in joining him. Needless to say I was interested and 21 years on, Francis J. Vassallo & Associates Group (FJVA) comprises a team of over 70 highly experienced, multidisciplinary professionals, providing corporate, tax and advisory services to international companies, family offices and private clients.
What have been the biggest changes in the firm since then? Has it achieved what you anticipated?
FJVA started as a family run business and whilst we pride ourselves on being an independent firm that continues to run as a close-knit family company, we recognise talent and value our team. In fact, we are now a complement of seven partners, which includes both family and non-family members, all of whom share the same culture and values. Our aim is for the company to operate with the same disciplines as any other international company whilst retaining the focus on the ‘private banking’ concept. Over the years we have also branched out from being predominantly a corporate services provider to a company of international repute in the provision of services relating to tax, trusts, foundations, regulatory advisory services, amongst others.
Whilst our strategy over the years has always been to mainly focus on our core business, our aim has also been to diversify our services, grow the business, whilst at the same time maintaining our core values. This, in my view, has been achieved despite our conservative approach and is embraced and maintained by all partners and staff. Whilst increasing the bottom line naturally forms part of our strategy, merely generating profits is not what drives our business. The company’s reputation and core values supersede anything else.
The company’s reputation and core values supersede anything else.
What is the current state of the Financial Services Industry in Malta?
Since the comprehensive financial services legislation was enacted in 1994, the financial services industry in Malta has flourished at an incredible growth rate. This growth was accentuated not only by an increase in the local indigenous service providers but also by international service providers who decided to set up offices in Malta. Large multinational companies have decided to use Malta to centralise their international holding activity as it has enjoyed an excellent reputation of being a centre of high repute.
Concernedly, in the past few years, Malta has faced some global reputational damage. As a result, negative international press has in some instances caused corporate decisions makers to look at alternative jurisdictions instead of deciding on coming to Malta. Notwithstanding this, whilst the financial industry in Malta is still growing and remains an attractive alternative for many international companies, the pace at which it continues to grow has somewhat slowed down. A sound and strong reputation of a financial centre is the most crucial ingredient for the success of any financial industry.
How has being a member of the Malta Institute of Financial Services (IFSP) and of the Malta Institute of Management (MIM) affected your role at FJVA?
The firm has since inception been a member of both the IFSP and the MIM. In our initial years, we were also an active member of the Council of the IFSP. The IFSP is considered to be ‘the voice of the financial services industry in Malta’ and a liaison between the Government, the various authorities and the members that it represents. Whilst the IFSP has been instrumental in embracing opportunities, there is however scope for it to take an even more active role in protecting the reputation of the industry. This can be achieved by developing reputation management strategies, educating and assisting in the discipline of all the stakeholders in the financial services industry as a whole.
We have to educate clients to understand that as a regulated entity in an EU jurisdiction, there are more compliance obligations than in third-party countries.
On the other hand and since its inception in 1964, the MIM has been at the forefront of training and management development. The Institute organises training, events, networking and guidance to its members and the business community in Malta. I, together with many of my colleagues, have all greatly benefited from the various courses and seminars organised by the MIM and, as we have done in the past and continue to undertake in the future, we will sponsor many of the events that it organises.
What has been the biggest challenge you’ve faced in your growth to an international firm?
We grew significantly in a short period of time and this has been a challenge in itself. Ensuring a ‘private banking approach’ to the services that we provide to our clients is something that we strive to maintain. It’s a culture that has been adopted from the beginning. This, together with our ethical approach to business, is what defines us. Whilst it has always been our aim to grow the company from the small family business that we were 21 years ago to the team of multi-disciplinary professionals that we are today, we do not intend to outgrow the ‘private banking’ concept that has been the foundation of our success to date. After all, we are not in the business to sell companies, we aim to provide solutions.
A challenge faced by companies in our industry, to which we are no exception, is the increase in regulatory compliance and its associated costs. The ever-demanding compliance obligations which our industry faces and the dynamic nature of the same are not always in sync with clients’ expectations; at times it may also be considered intrusive. We have to educate clients to understand that as a regulated entity in an EU jurisdiction, there are more compliance obligations than in third-party countries. Although this is creating an additional cost, it has to be understood that this is also to their benefit.
At the same time, we are also not immune to the challenges faced by the credit institutions, in particular, those situated in Malta. It has become increasingly more challenging for companies establishing in Malta to set up banking relations as a result of the de-risking approach being adopted by all. This is also dictated by the banking relations that such credit institutions have with their correspondent counterparts.
What would you advise to others undergoing a surge in growth or those who wish to set up a business in Malta?
Keep strategies simple and effective since complexity is the enemy of execution and stay true
to your core values.