WE’RE WHERE YOU NEED US.

Alter Domus

MALTA NEWSLETTEROCTOBER 2018

2 ALTER DOMUS MALTA NEWSLETTER

Alter Domus

MALTA NEWSLETTER

MALTA UPDATE

DBRS RATINGS LTD (DBRS) NAMES MALTA ONE OF THE TOP PERFORMERS IN EURO AREA ........................................................................................................................04

MOODY’S AFFIRMS ‘A3 POSITIVE’ RATING FOR MALTA .......................................04

ALTER DOMUS GROUP UPDATE

EXPANSION OF DEBT AND CAPITAL MARKET SERVICES PROVIDED WITHIN THE EU ........................................................................................................................................05

LOCAL BUSINESS UPDATE

‘MALTA - TOMORROW’S WEALTH ADMINISTRATION HUB?’ ...............................05

ALTER DOMUS MALTA’S FUND SERVICE LINE GROWS FURTHER IN 2018 .....06

PRIVATE WEALTH RELATED CONFERENCES ............................................................06

LOOKING FORWARD ............................................................................................................07

CONTACT................................................................................................................................08

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CHRIS’ UPDATEDear Friends,

After the quieter summer months, we now come close to the year end. It’s the period where one takes stock of the current situation and starts planning for the next year. Now ten months into the year, I must say that matters were quite busy here on both the local and global fronts. Locally we have continued to grow our existing business to service more clients resulting in over 30% growth across all our business lines. We are now close to 150 employees with the intention to get closer to the 200 mark next year. On the international front, Alter Domus has been very busy, with a continued growth in EMEA as well as the focus on the full integration of Cortland Capital Market Services in the US following the acquisition earlier this year.

In the recent months we also launched an enhanced level of services within capital market and debt sectors. More details can be found on the next pages.

Happy reading and hope to speak soon,

Chris CasapintaCountry Executive, Malta

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Alter Domus

MALTA NEWSLETTER

MALTA UPDATE

DBRS RATINGS LTD (DBRS) NAMES MALTA ONE OF THE TOP PERFORMERS IN EURO AREAMalta has been named as one of the top performers in the euro area (EA) by ratings agency DBRS.

‘By country, the top performers include Malta, Latvia, and Slovenia, while the underperformers include Italy, Belgium and France’, the agency wrote in its European macro update for the second half of the year.

DBRS said that EA growth had a weak start to the year, but has remained steady. It also reported that in view of rising external risks to the outlook, the European Central Bank (ECB) revised down its economic growth forecast for the EA for 2018 to two per cent from 2.1 per cent at its September policy meeting, following a revision from 2.4 per cent at its June meeting. It also revised the projection for 2019 to 1.8 per cent from 1.9 per cent.

DBRS also confirmed Malta’s long-term foreign and local currency-issuer ratings at A (high) and its short-term foreign and local currency-issuer ratings at R-1 (middle). The trend on all ratings is Stable. These ratings are based on the fact that economic growth accelerated to 6.4% in 2017.

Benefitting from strong citizenship scheme (Individual Investors Programme or IIP) proceeds and tax-rich economic growth, the fiscal surplus reached 3.9 per cent of GDP in 2017, surpassing its target. Against this backdrop, the government debt-to-GDP ratio dropped 5.5 percentage points to 50.7 per cent of GDP. DBRS expects the debt ratio to continue declining related to the primary surplus and the favourable debt snowball effect.

DBRS also highlighted some of Malta’s challenges, citing ‘contingent liabilities, stemming from its large state-owned enterprises and concentrated financial sector, and rising age-related costs’ as sources of vulnerability for public finances.

Malta’s small and open economy, with some sectors highly dependent on foreign demand, such as tourism, exposes the country to external developments, DBRS said.

Source: Malta Department of Information

MOODY’S AFFIRMS ‘A3 POSITIVE’ RATING FOR MALTAThe latest credit opinion by Moody’s Investor Services affirmed an A3 rating for Malta with a positive outlook, and added that it will upgrade the rating for Malta to A2 if the improvement in fiscal strength is sustained. In its report, Moody’s highlighted Malta’s sustained progress on public sector debt reduction with the prospects of further fiscal consolidation on the back of a buoyant economic performance.

Per-capita income and very high scores in terms of global competitiveness. While its small size and openness make it susceptible to external shocks, Malta is able to weather such storms due to the high level of competitiveness and elevated wealth levels.

Malta’s institutional strength is deemed ‘High’ by Moody’s, reflecting the country’s robust policy and public-sector entities’ policymaking framework, and enhancements to institutions.

Moody’s acknowledges that Malta’s fiscal consolidation efforts are bearing fruit as the fiscal surplus is expected to hover around 2.5 per cent in 2018 and 2019. This, coupled with strong economic growth, will continue to contribute towards a rapid reduction of Malta’s debt-to-GDP ratio, according to Moody’s.

The rating agency considers Malta’s susceptibility to event risk, stemming from the banking sector primarily, as ‘low’, based on the relative size of the sector in the economy and the financial soundness of the domestically oriented institutions, amongst others.

Chris Casapinta, Country Executive of Alter Domus Malta says: “Both the DBRS and Moody’s credit ratings re-affirm Malta’s strong economic performance with DBRS singling out Malta as a top performer in the Euro area. These ratings, but more so the comments by these two top global credit-rating agencies, continue to emphasize how Malta, despite being a small jurisdiction, is punching above its weight. These are all characteristics that contribute to make Malta a very attractive Financial Services jurisdiction”.

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ALTER DOMUS GROUP UPDATE

EXPANSION OF DEBT AND CAPITAL MARKET SERVICES PROVIDED WITHIN THE EUEarlier this year, Alter Domus officially announced the acquisition of Cortland Capital Market Services, an acquisition which represented a key milestone for the development of Alter Domus’ private equity, real estate and debt offering.

Throughout the years, Cortland has been offering to investors and issuers of leveraged loans a full suite of asset and portfolio servicing solutions, mainly in the US, with some of these services being introduced in the European Union (EU) as from 2014. Alter Domus is now pleased to announce that the debt services offered in the EU and within European countries will be expanded in the coming months to form a new pan-European Debt and Capital Market Platform.

The specific services to be expanded to the EU are the following:

• Agency Services: Include acting as an agent for lenders to communicate with and monitor the borrower(s)

• Credit & Structured Product Services: Include acting as middle office for holders of leverages loans

• Loan Trade Settlement Services: Primarily the settling of loan trades among buy and sell-side counterparties

Tim Houghton is the Alter Domus Head of Debt and Capital Markets, and has been tasked with setting up this new Pan-European Debt and Capital Markets platform. The services mentioned above will be mainly offered through teams being currently set up in our Cork Office in Ireland, and also from our London Office. This expansion is in line with Alter Domus’ vertically-integrated model.

LOCAL BUSINESS UPDATE

ALTER DOMUS MALTA’S FUND SERVICE LINE GROWS FURTHER IN 2018During 2016 and 2017, a decision was taken to move away from retail and traditional equity/bond funds to focus more on funds investing in alternative asset classes. This has allowed us to redesign our technology platform and processes to be in a unique position to service asset managers and fund managers in the best possible way. This decision has in fact yielded good results, achieving a total of $1.85 billion of Assets under Administration (AuA). Over the years, the service offering by the funds service line has expanded to include the following:

• Compliance Services and Regulatory• Middle Office Services• Depositary Services• Third Party AIFM support services• Staffing of asset management companies

As mentioned earlier, from a global perspective, the fund service line has been very occupied with expanding Debt and Capital Market Services by establishing various funds and securitisation vehicles that have been listed both locally and overseas.

Our clients entrust us with administrating their funds because of the quality of the service they receive, which stems from our operational efficiency and from the standards and systems set in place by the Alter Domus group. This service offering means that our clients benefit from reduced risks and costs optimisation, which is what sets us apart from the competition.

‘MALTA - TOMORROW’S WEALTH ADMINISTRATION HUB?’As managers look to break away from the status quo, Malta has a unique opportunity to consolidate its position as the private wealth management hub of tomorrow. While jurisdictions such as Luxembourg, Ireland and the Channel Islands target institutional investors, Malta is filling the gap as a unique and flexible private wealth administration hub for family offices and private wealth structuring.

Today, asset managers are opting for and seeking out opportunities to structure wealth by adopting a tailored approach rather than a general one-size-fits-all approach. This trend started gaining momentum following the various tax optimisation actions implemented over the last years, giving more importance to the choice of geographical location when structuring wealth.

Moody’s notes that despite the tightening labour market, increased foreign workers and higher female participation contained the wage growth.

The report explains that while growth is expected to moderate from recent highs, it notes that Malta’s economic growth will remain strong in both 2018 and 2019.

Source: Malta Department of Information

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Alter Domus

MALTA NEWSLETTER

In the last 15 years following the tax optimisation actions, the trend that changed the way structured wealth is organised has accelerated. The most visible consequences have been recent regulatory developments that impose international transparency standards, such as BEPS (Base Erosion and Profit Sharing) and TP (Transfer Pricing). Wealth managers are being ushered into a new era of structuring, straying away from what has been traditionally tax-driven decisions to more transparent private wealth management and administration solutions.

Internationally, the island’s reputation as a location to establish and manage private wealth has grown rapidly as the demand for secure solutions to wealth administration issues rises. Malta offers a holistic package, combining all the features of English law within a civil law framework, allowing managers to operate efficiently within a hybrid regulatory framework that encompasses a European framework, thereby providing a viable solution for wealth structuring.

Malta offers a wide range of investment vehicles, with wealth management and administration supported by a legal infrastructure and regulatory framework in which various asset management solutions can be sought for private clients. As the international financial market becomes ever more competitive, flexibility has been the key to Malta’s success.

An example of such flexibility is the fact that Malta is one of the few jurisdictions catering for both trusts and foundations. Malta is unusual in that its legal system is based on common law – a situation not generally found in civil law countries. Such flexibility has proven attractive to both corporate entities and high-net-worth individuals (HNWIs).

Thanks to its geographical location in the centre of the Mediterranean, Malta has always been a hub of maritime activity, most notably in the private yachting and super-yacht segments. Various leasing and registration programmes mean the country is an ideal domicile for private client wealth structuring. The same is true of the aviation industry, with leading companies in aircraft leasing and operators of luxury private aircrafts selecting Malta as a regional hub.

The jurisdiction also offers a number of fund options, such as alternative funds, which are free of investment restrictions and therefore attractive to high net worth investors. Cost optimisation and a very reputable EU location are also equally important drivers. Malta offers a well regulated, highly respected, sophisticated EU environment, and the country is becoming a popular

wealth management jurisdiction for people from across the world.

While the transition for wealth managers poses some challenges, the country itself has taken steps to facilitate financial activities. Malta has experienced continued economic growth in recent years, with the government, regulator and industry professionals working to develop and promote niche segments. It is now one of the leading international jurisdictions of choice for industries such as i-Gaming, financial services and more recently an innovator for block chain and digital innovation.

Our View“The only question with wealth is: what do you do with it?” – John D Rockefeller.

The administration of private wealth requires knowledge of multiple asset classes and international structures. Intelligent optimisation that takes a number of important variables into account can help deliver pro-active solutions for private wealth clients. As ensuring peace of mind, stability and continuity are paramount to today’s new generation of private clients, Malta is creating solutions to yesterday’s problems.

PRIVATE WEALTH RELATED CONFERENCESCROSS BORDER PLANNING FOR PRIVATE CLIENTS

From 24th to 25th September, Przemyslaw Koger, Director and Head of Relationship Management at Alter Domus, attended the Cross Border Planning for Private Clients conference in London. The conference included a range of high-profile speakers and focused on the following topics:

• Global Political and Economic Update • Tax & Structuring• Wealth Management, Private Banking & Family

Offices• Regulatory Impact on Clients• Real Estate and Citizenship by Investment• Jurisdictional Options

During one of the sessions, Przemyslaw had the opportunity to give a presentation outlining the various initiatives, structures and options that are available to Private Clients who wish to structure their wealth through Malta. These included corporate entities, funds, trusts, foundations, residency programmes and many others.

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PRIVATE WEALTH STRUCTURES: LONDON MEET MALTA

On 26th of September, Alter Domus co-organised a panel discussion with Dolfin – a wealth management firm based in London. The event was sponsored by Finance Malta and focused on wealth structuring for family offices.

Topics discussed included the following:

• Prevailing trends in the family offices / private clients market

• Future of wealth administration industry• New challenges in structuring family offices• New investment styles, new markets and

innovative asset classes• Malta – a viable option for structuring private

wealth• Malta’s Notified Investment Fund

The event gave us the opportunity to strengthen our relationship with Dolfin and to meet various partners from top law firms based in London whose clients include High Net Worth Individuals. We networked with a number of interesting contacts, including family office representatives and smaller asset managers looking at Brexit solutions.

The full list of speakers was as follows:

• Przemyslaw Koger, Director and Head of Relationship Management Malta (Alter Domus)

• Georgios Ercan, Head of Sales (Dolfin) • Jamie Mathieson, Partner (New Quadrant

Partners) • Ashley King-Christopher, Tax Partner (Charles

Russell Speechlys)• Yuri Bender, Editor-in-Chief (Professional Wealth

Management at Financial Times) - Moderator

LOOKING FORWARD We are looking to organise a couple of boutique events in the last quarter of 2018 before we welcome 2019 with a host of new initiatives.

In November we shall be organising a networking session with drinks and canapés at Business Office Services International, our affiliate company. We will be partnering with a foundation and auctioning a number of artwork pieces, with all proceeds going to charities. The event is in the final stages of organisation; more details will be available soon.

Over the next few weeks, we are also looking to organise our Annual Asset Management Forum for the 4th consecutive year. The event is organised in partnership with Ganado and Deloitte and this year will be focusing on the topics which are relevant on a daily basis to asset managers such as the new IFRSs, AML, Cybersecurity and the Internal Control Environment. Further details on this event will be released shortly.

Last year’s forum attracted over 100 delegates and covered key topics such as the implications of MIFID II, GDPR, securitisation, risk and compliance challenges and also Fintech. The feedback received from the participants was really positive and this year we will be implementing the suggestions that were put forward after the event to make it an even bigger and better forum.

As 2018 draws to a close, we are already planning our initiatives for 2019. Our objectives are to continue on the growth trajectory that the Alter Domus Malta office has managed to achieve throughout the last years.

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18OFFICEAlter Domus (Services) Malta LimitedVision Exchange Building Territorials Street Mriehel BKR 3000 Malta

T + 356 22 05 1000

contact.mt@alterDomus.com

www.alterDomus.com

WE’RE WHERE YOU NEED US.

CONTACTCHRIS CASAPINTA Country Executive Malta

+356 22 05 10 03 Chris.Casapinta@alterDomus.com

PRZEMYSLAW KOGER Head of Relationship Management Malta Head of Depositary Services Malta +356 22 05 10 93 Przemyslaw.Koger@alterDomus.com

WE ARE WHERE YOU NEED US TO BE