The Business Observer Newspaper - 13th August Issue

INTERVIEW

Issue 32

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August 13, 2015

Distributed with the Times of Malta

HSBC Bank Malta’s return on equity is 10.5 per cent, getting closer to the group’s benchmark of “over 10 per cent”. CEO Mark Watkinson explains the pressures driving down profits. see pages 10 and 11 >

NEWS e Jaguar dealership will next year revert to Muscat Motors after over 20 years, following a consolidation by owners Tata with its Land Rover agents. see page 3 >

Maternity leave contribution through FS5 Vanessa Macdonald Employers will probably be paying their contribution to the maternity leave fund via the Inland Revenue Department, which will then pass it on to the trust which will administer it, the Malta Employers’ Association believes.

The amount paid will be declared on the FS5 on which they declare their monthly employee payments.

Legal Notice 258/2015 issued last Tuesday gives the contributions that must be made to build up a fund from which the 14 weeks of maternity leave will be refunded to employers.

For the majority of workers, employers will pay 0.3 per cent of the basic weekly wage of all their employees, but there are also flat rates for specific categories.

The MEA explained in a circular to its members that a new line would be added in the FS5 form, indicating the amount paid by the employer towards this fund.

“The main payroll software makers are working to adjust the payroll systems in time ... In case of companies that do not manage to make the deduction in the next payroll (some of them are due next week), they will be able to make the deductions with the backdating to July 6 in the following pay period,” it said.

The fund spreads the load for maternity leave across all employers, as will make a small regular payment, rather than having to pay maternity leave for 14 weeks – very often coinciding with additional payments for a temporary staff member or in overtime to cover for her absence.

The MEA pointed out, however, that the burden remains on employers’ shoulders.

“It is to be made clear that employers are still incurring the cost of the 14 weeks, unlike many other countries where maternity leave is paid by the State,” director general Joe Farrugia said.

The GRTU is concerned about another aspect: that employers will need to pay the maternity leave and then apply for reimbursement from the fund.

“e fund will have to handle around €8.5 million in maternity leave payments every year”

“We still believe that the fund should just pay the maternity leave to the employee in the first place, since government already has a system in place to pay weeks 14 to 18.

“It remains to be seen how long the reimbursement will take! We have had very bad experiences with refunds in the past,” chief executive officer Abigail Mamo said.

The board of trustees overseeing the fund will include three representatives from employers’ associations and one from a union, according to Legal Notice 357.

They will need to submit a report on the trust every year to the MCESD and will also recommend adjustments to the rate of contribution payable.

Rough calculations indicate that the fund will have to handle around €8.5 million in maternity leave payments every year.

NEWS e Central Bank has already bought €233m of Malta Government Stocks but it is urging banks to relinquish more of their holdings. see page 5 >

CASE STUDY Joe Cordina pulled out of the 2013 election after he was embroiled in the oil trading scandal. He ponders on what it means to be a fiduciary and whether due diligence can ever be truly foolproof. see pages 12 and 13 >

e Business OBSERVER

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NEWS

THE GASAN ZAMMIT SHOWROOM AT MRIEĦEL.

Muscat Motors to take back Jaguar Muscat Motors will next year be taking back the Jaguar dealership that it lost in 1994.

The Jaguar brand has since then been represented by Gasan Zammit Motors, one of the nine brands it represents along with Ford, Chevrolet, Mazda, Honda, Volvo, Isuzu, Yamaha and Capelli.

Gasan Zammit’s representation of Jaguar will end on May 31, 2016.

Gasan Zammit Motors has represented Ford in Malta for almost a century when

Gasan Group founder Joe Gasan signed the first Ford dealership in 1928. It took over the Jaguar brand a few years after Ford bought it for $2.5 billion, spending a further $10 billion to revive its fortunes.

In 2008, Ford decided to sell both its Jaguar and Land Rover brands to Mumbaibased Tata Motors, for $2.3 billion.

Jaguar Land Rover Limited, the company owning the Jaguar and Land Rover Franchises, pursued global consolidation of the

two British luxury franchises into singlepoint dealers for a number of years.

Muscat Motors, founded in 1943/1944, has represented Land Rover for over 45 years and will now be taking back the Jaguar dealership that was one of the first brands in its portfolio.

It also holds the franchise for BMW and Mini.

“The consolidation plan gathered more momentum from 2012. Malta was one of the last remaining handful of markets where the brands were separate,” Gasan

Group chief executive officer and Gasan Zammit director Mark Gasan said.

Muscat Motors declined to comment.

Muscat Motors will be taking over the luxury brand at a tough time: The Business Observer had reported a year ago that in the past five years only 9.8 per cent of BMWs and 13.2 per cent of Jaguars registered in Malta were bought new, the remainder being bought either from second-hand car dealers or from overseas.

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NEWS ?? ??

Central Bank urges bank to release more government stocks €233m of government stocks bought

by CBM by July The Central Bank of Malta has been able to buy up €233 million worth of Malta Government Stocks in the past four months but its governor has urged local banks to further reduce their holdings.

Banks currently hold a third of all Malta government stocks, the second highest level in the eurozone.

Although it is up to them to decide how much government paper they wish to hold, higher demand for domestic credit and evolving regulations regarding bank holding of government bonds may be influencing banks in deciding their level of such holdings, he said.

“Each bank sets its own optimum percentage based on the margins of their minimum capital ratios and other alternatives they have for investing their capital and depositors’ funds,” Josef Bonnici said.

“For the economy as a whole, it would be preferable if more government paper were held by retail ‘buy and hold’ investors, so that banks can focus more on providing prudent credit growth which is so essential in a growing economy.

“Furthermore given possible future regulatory changes with regard to banks’ holdings of government bonds, I believe that there is further room for reducing MGS holdings – especially by some local banks,” the governor said.

“e intention presently is to complete the programme over the period as originally envisaged”

The Central Bank of Malta bought €24 million of government bonds in July as part of the ECB’s asset buying programme, bringing the cumulative total to €233 million.

In April, the CBM had calculated that it would need to purchase around €36 million a month to reach its overall target by September 2016, which means Malta is ahead – in spite of the slow start.

However, Prof. Bonnici warned that the pacing of the programme was not necessarily linear.

“The Central Bank’s cumulative purchases have recently gone above the target level, but one has to keep in mind that in the coming months, the market may go through a normal seasonal reduction in liquidity,” he said.

“Subject to any decision which may be taken by the ECB Governing Council in revising the programme, the intention presently is to

complete the programme over the period as originally envisaged.”

Prof. Bonnici had said in April that investors were holding on to government paper but since then, there has been a greater disposition by bond holders to sell government bonds.

“Two-way trade in the market is now more prevalent than when the programme was introduced,” he told The Business Observer.

The ECB’s asset purchase programme is aimed at injecting liquidity into the banking system – as well as dampening the holding of sovereign debt by banks, which led to the financial crisis in many countries.

The extra demand for MGSs by the public sector purchase programme (PSPP) has tended to exert an upward effect on prices than otherwise would have been the case, he noted.

“This has to be seen in the context of the whole eurozone of

which Malta forms part. Malta’s sovereign yields and credit spreads are also influenced by international market developments, with the German bund being the benchmark anchor for the whole eurozone.”

Malta’s debt securities had the longest remaining maturity weighted average of all the eurozone members, at 11.03 years.

The shortest was 2.96 years in Estonia, just over the two year minimum set by the ECB. There are currently €5 billion worth of MGS outstanding.

In March 2015, the Eurosystem started to buy public sector securities under the PSPP, with a monthly purchase target of €60 billion.

By the end of July, €249 billion had been purchased, in addition to other purchases from associated asset purchasing programmes.

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e Business OBSERVER | August 13, 2015

NEWS ??

Property commission should be regulated Vince Baldacchino, the managing director of Owners Best and Developers Best, has two controversial proposals: either legislate for all involved in the property market to charge a five per cent commission – more than the 3.5 per cent he currently charges – to the vendor and then let all the providers compete on the level of service, or split the commission between the buyer and the seller.

“To earn that commission they need to introduce the buyer and seller to each other, take an active and intelligent role in negotiating the deal and follow it to the end,” he said, adding that he realised this would probably never happen.

“In the US, the commission is shared between vendor and buyer. I believe that it is very fair as the estate agent is then looking after the interests of both seller and buyer – who could often both be his clients in a small market like Malta. It would certainly reassure all those involved that property valuations are market-based, and not meant to increase the commission, as many people assume!”

Mr Baldacchino believes that sellers will always try to sell a property without incurring any fees, and will only then try out other methods in order of cost.

“It is only natural that people will go for what they perceive to be the cheapest option. This is why so many people will start off by putting a ‘for sale’ notice in the window, posting a notice on their Facebook profile or listing the property on Maltapark.

“If this does not work after a certain time – usually a few

“It is only natural that people will go for the cheapest option” months – they advertise in the media and social media, specifying ‘no agents’ and are quite happy to set up viewings with potential buyers. But if this does not work, then they go to intermediaries, us and eventually to real estate agents – in order of increasing commission,” he explained.

“If they think they can sell it without incurring any cost, then they baulk at the idea of paying a few thousand. But this means that they have usually wasted six to 12 months, during which time they have to have the property always

ready and available for viewing, which is very demanding.”

Owners Best offers a hybrid of advertising agency and real estate agency – with a commission for successful sales.

“It’s a completely different business model, which has become tremendously popular because the magazine, complemented by the website and TV, appeals to the age bracket we are targeting,” he admitted.

He believes that buyers are put off by the different prices quoted for the same property.

“Sellers list their property online, with us and with real estate agents – sometimes dropping the price without updating all those involved. And sometimes raising it, which is even worse! And developers often advertise directly for one price, giving another higher one to agents.”

He was also sceptical about real estate agents, pointing out that they are interested in selling a property – but not necessarily yours.

“It is quite common for the negotiator to bring a lot of people to see your house even though it is not what they are looking for, as this makes you feel that they are working hard. And they sometimes allow you to leave your property on the market even though it is overpriced, as it makes other properties they represent seem like a bargain,” he said cynically.

“The market has become a jungle. The White Paper will tackle one part of it but if it really had the interests of the consumer at heart, then it would regulate the whole market, from owners selling direct to developers and so on.”

White Paper will only apply to real estate agents The White Paper will – according to the latest version seen by the Federation of Real Estate Agents – only apply to real estate agents and property management companies, which account for roughly half the market.

Intermediaries or introducers (sensara) will apparently not be included – although a few have expressed concern that they will also be forced to come in line. At the moment, they operate as “introducers” and claim a two per cent fee, which in practice is shared between buyer and seller.

It also will not cover all the other ways in which property is sold, from property websites and printed publications, to television programmes and auctions – all of which still have a significant impact on the professionalism of the property sector, the federation believes.

“And it is not clear whether foreign companies operating on a cross-border basis will be exempted,” the president of the federation, Douglas Salt, said.

“There is space in the market for all forms of operator. It is up to real estate agents to en-

sure that customers feel they are getting value for money from us,” he said.

The government is currently drawing up a White Paper on the regulation of real estate agents, something the federation hoped to avoid, having self-regulated for years. For example, disputes were handled by the federation’s board of ethics.

However, it is now working closely with the government to ensure that the eventual legislation would reach the federation’s aim: improving standards across the board. The council is currently reviewing the draft of the White Paper before this is sent out for public consultation. The ministry did not reply to questions sent to it.

“As property values go up, consumers need the best possible advice from agents and negotiators, as mistakes will be that much more expensive. And with so many more foreigners buying property – particularly high net worth individuals – it is important for Malta as a whole to deliver on what we promise,” Mr Salt said.

The main thrust of the White Paper will be to establish warrants for both an agency and

its negotiators, awarded after successful training and certification.

“We are proposing that those who have over two years experience will get an automatic licence, those who have less than that would have to attend a brief course, while new entrants will need to follow the full course – ideally an evening course so that they can still start working under supervision.

“It is not yet clear who will provide the training or the certification, or who will monitor and discipline the licensees. We are assuming that there will be an entity with the authority to both fine and strike off rogues,” he said.

The federation hopes that the training and warrant would raise the profile of the negotiators, weeding out those who are – somewhat naively – after a quick buck.

“It will definitely mean that entrants will have to make more of a commitment. If done professionally, negotiators need comprehensive knowledge and a variety of skills. My company trains its negotiators for over three months,” he added.

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e Business OBSERVER | August 13, 2015

NEWS ??

GTA wants seasonal ferry fares The Gozo Tourism Association is proposing that Gozo Channel should introduce low, mid and high season fares, in an attempt to boost visitors throughout the year.

“We would like to see radical changes in the ferry fares and structure. Furthermore, with a very improved public transport system on Gozo, we are also proposing a joint ticket that would be valid for travel both by land public transport as well as by ferry.

“Such changes will definitely entice more commuters to cross over to Gozo, especially during the winter period,” Joe Muscat, the CEO of the association, said.

In 2008, Gozo tried to overcome seasonality by offering free ferry trips. The scheme ran for two winter seasons, but stopped.

The GTA would like to see this reintroduced.

“The scheme offered half-price ferry tickets for Maltese crossing over to Gozo. The amount was deducted from the accommodation and restaurant bill of the participating establishments on presentation of the ferry tickets.

“While this scheme was viable for the accommodation providers, it did not turn out to be popular with the Gozitan restaurants. Incentives like this and the reduced ferry fares introduced these last two years will attract more domestic travellers, a very important part of our market,” he said.

The tourism product in Gozo is still evolving. Tourist accommodation – especially farmhouses –

is now found in every corner of the island, as are restaurants.

The Malta Tourism Authority reported that there were 95 licensed restaurants in Gozo in 2010, which increased to 101 by 2014.

“Although Marsalforn, Xlendi and Mġarr have most restaurants, there are now outlets in almost all the Gozitan villages.

The GTA had persuaded Gozo Channel to tweak the summer

“Gozo Channel is performing 56 trips in 24 hours. Connectivity should not deter potential diners from crossing over to Gozo”

schedule and the 11pm ferry was postponed to 11.15pm to allow dining commuters more time.

“Gozo Channel is performing 56 trips in 24 hours. Connectivity should not deter potential diners from crossing over to Gozo,” he said.

Marvin Cremona, the owner of Brookies Restaurant in Victoria, is not convinced.

“In summer, the evening ferry schedule is good, but in winter

the evening schedule is not in our favour,” he lamented.

Philip Fenech, deputy president of the GRTU, also believes that the half-price ferry scheme should be reinstated to help business during the shoulder months.

“It was a great success with various restaurants. We should encourage this scheme to be repeated on a regular basis, since the expense to do it is well covered by the value added and the VAT collected,” he said.

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OPINION

How new regulation impacts German-Maltese succession Christian Pisani Succession planning for families with a European outreach is complicated. This is the case once the deceased has assets in various countries, more than one nationality, domicile or residence.

Whereas the rules on the free movement of persons and capital within the EU facilitated life tremendously, conflicting principles of succession laws within the EU remained.

Anything simplifying the position is therefore most welcome. The new European Succession Regulation No. 650/2012 (or Brussels IV) which applies to the succession of persons who die on or after August 17 promises that.

In light of the new regime, existing wills and estate-planning measures should be reviewed and new choices should be carefully considered together with any tax-planning opportunities and the effects of marriage contracts.

This also holds true for German-Maltese cases. Indeed, Brussels IV may offer Germans the opportunity to avoid the restrictions of Maltese succession law applicable for Malta-based immovable property. At the same time, it might be necessary in the future to draw up a will in cases where a German national relocates to Malta for professional purposes only for a limited period of time with no assets in Malta.

Succession laws differ from country to country. For example, in the case of a single deceased without children, both his parents and siblings would inherit under Maltese succession law in the absence of a will.

Under German law, on the other hand, only his parents would be his legal heirs. At the same time, legal systems based on French succession law such as the laws of Malta substantially restrict the testamentary freedom. Indeed, depending on the number of children, up to one half of the estate is reserved by law to the testator’s children and – alongside descendants – the surviving spouse is legally entitled to an additional quarter of the estate.

Accordingly, the scope for testamentary dispositions under Maltese law is very limited.

German succession law is much more liberal. In case of disinheritance, children and the surviving spouse are entitled only to half of the portion of the inheritance due under intestate succession.

Accordingly, it is crucial to determine which succession law governs. In the past, the application of both German and Maltese law was more or less inevitable once assets were located in both countries. To gain legal certainty, we therefore advised clients to draw up a will in such cases. Whereas for the time being two (or more) wills were indeed necessary to cover the various jurisdictions potentially involved, Brussels IV will change the legal situation entirely.

The main aim of Brussels IV is to simplify matters both at the administrative and substantive level. Under the new EU regulation, the courts of a single jurisdiction will ideally apply a single law to the entire estate notwithstanding the location of the assets. As a general rule, jurisdiction and governing law will track each other and will be those of (1) the ‘habitual residence’ at the time of death, (2) unless there is a jurisdiction to which the deceased was more closely connected, provided that (3) the deceased did not elect the law of its nationality to apply. Furthermore, the regulation introduces a European Certificate of Succession (ECS) which parties interested in an estate may apply for at the courts in the relevant jurisdiction in order to evidence their rights to the estate. In cross-EU cases, an ECS may replace the usual national post-death certificates or instruments.

The notion of ‘habitual residence’ is key to Brussels IV. It has to be distinguished from the notion of domicile or residence under domestic Maltese law and is to be defined autonomously at EU level. Without providing for a binding definition, recitals 23 et seq. of the regulation stipulate that the competent authority should make an overall assessment of the circumstances of the life of the deceased during the years preceding his death and at the time of his death, taking account of all relevant factual elements, in particular the duration and regularity of the deceased’s

“e scope for testamentary dispositions under Maltese law is very limited” presence in the state concerned and the conditions and reasons for that presence.

The ‘habitual residence’ thus determined should reveal a close and stable connection.

The regulation recognises that determining the deceased’s ‘habitual residence’ may prove complex. This may be the case where the deceased for professional reasons had gone to live abroad to work, sometimes for a long time, but had maintained a close and stable connection with his state of origin. In such cases, the deceased could be considered still to have his ‘habitual residence’ in his state of origin, in which the centre of interests of his family and his social life were located.

Other complex cases may arise where the deceased lived in several states alternately or travelled from one to another without settling permanently in any of them. If the deceased was a national of one of those states or had all his main assets in one of those states, his nationality or the location of those assets could be a special factor in the overall assessment of all the factual circumstances. Given the lack of definition, determining ‘habitual residence’ may therefore become complex. This is namely the case for professionals working in an international environment, e.g. within the financial services sector or i-gaming, posted in Malta, or pensioners enjoying the Mediterranean sun in Malta while retaining links to their home country.

Brussels IV does not provide for the possibility to expressly choose the law of the ‘habitual residence’. Indeed, it remains for the competent authorities to determine the respective factual circumstances and decide accordingly.

The regulation stipulates, however, in its article 22, that the testator may choose the law of its nationality to govern its succession as a whole. For the reasons above, it may indeed be advisable for German nationals to opt for German succession law. Such choice would, however, not predetermine the jurisdiction of German courts and a respective choice-ofcourt-agreement is only possible after the testator’s death. This may create legal uncertainties in timely administrating the estate as a Maltese court will have to apply German law. We therefore advise to name an executor in the will who is entitled to apply for the jurisdiction of German courts should the (potential) heirs not agree accordingly. Once a German court has jurisdiction it is ensured that the court applies its own law which facilitates to predict the outcome. Such German court may then eventually issue a European Certificate of Succession also for the Maltabased assets.

Christian Pisani is a German-qualified lawyer based in Munich. christian.pisani@pisani-partner.de

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e Business OBSERVER | August 13, 2015

INTERVIEW

Global perspective for local bank Last week HSBC Bank Malta reported pre-tax profits of €36 million for the first half of the year, down €4 million on the same period last year. CEO MARK WATKINSON explained the context of these results to VANESSA MACDONALD

Admittedly, €36 million is quite a respectable pre-tax interim profit. But it is down from a high of €53 million in 2012 and 2013.

This is being blamed on regulatory costs, lower interest rates and loan impairments. Is it the case?

As far as the business is concerned, I think I would agree with you that €36 million in this challenging environment is a positive result. As I mentioned during the presentation (to stockbrokers and the media last week), all three of our business lines – retail banking and wealth management, commercial banking, and global banking and markets – continued to be profitable.

I feel that over the medium term there are good opportunities for sustainable growth, both on the

domestic front as well as on an international level, especially in the areas of trade and tourism.

You are satisfied but Bank of Valletta’s pre-tax profits went up from €45m to €58.5 million between 2011 and 2015. What is the difference between what you are doing and what they are doing?

We have a different business and risk appetite model. You understand that we cannot comment on the performance and strategy of other companies, but we do compare our metrics with industry and HSBC Group standards. As far as our activities and the business that we are directly involved in is concerned, we are pleased with the return that we are generating. One has to understand that over the past

two to three years, HSBC Malta – as part of the HSBC Group – has been implementing changes to its operating and regulatory standards and has significantly de-risked its business. Hence the considerable investments in the risk and compliance function over the last years which, coupled with the increasing regulatory costs, have had an impact on our levels of profitability. We believe that we are ahead of the sector in this respect.

Your cost to efficiency ratio has gone from 43.8 per cent in 2011 to 55.6 per cent this year – while BOV’s remained stable from 42.5 per cent to 42.9 per cent. So it can’t all be down to regulatory changes and compliance costs as they are facing the same challenges...

Once again, we do not comment on the metrics and performance of other companies. As far as our 55 per cent is concerned, when you compare that with our peer group banks across the European market, while we would obviously all love it to be lower, there are challenges that remain such as the low interest rate environment and the increasing regulatory, risk and compliance costs, as mentioned earlier. The key is to achieve levels of profitability which are sustainable and within our risk-appetite model.

You wound up security and custody services in 2014. Why? Are any other business lines being reviewed?

There has been a significant change in regulation and law across

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INTERVIEW

the European markets. As a result of that, the HSBC Group decided that it will operate its security and custody business in specific centres of excellence, where the scale is larger. As a result, such part of our business, namely security and custody, has been transferred to these centres.

AT A GLANCE: FINANCIAL HIGHLIGHTS

HSBC Bank Malta was found to be under-provisioned by €30 million during the recent asset quality review carried out by the European Central Bank. In which part of your portfolio were they?

Were there any overprovisions in other parts of your portfolio?

What has HSBC done about this – your net impairments in the interims were only €3.6 million.

HSBC adopts a conservative approach to provisioning and was delighted with the bank’s strong performance in the 2014 ECB Comprehensive Assessment (AQR and stress test).

But the AQR used different metrics.

As far as the presentation of our numbers for the first half, I remain positive.

HSBC Malta’s interim capital ratio stood at 13.3 per cent. That means a lot of the group’s capital is being tied up for a country giving a return on equity of only 10.5 per cent, down from 18.5 per cent in 2011, perilously close to group’s revised target of over 10 per cent. At what point will the group decide that it would be better to move out of Malta and use that money elsewhere?

As far as our return on equity is concerned, our benchmark is above the group benchmark and I am delighted with that performance. To generate a return on equity in this environment with the additional costs that we have to bear is, I think, a remarkable achievement in this business. As stated earlier it is paramount to be well capitalised and liquid and this was confirmed by the ECB’s Comprehensive Assessment.

Again, I hate to go back to your competitors, but their return on equity (post-tax) was 12.92 per

HSBC BANK MALTA CEO MARK WATKINSON

“I am optimistic that we can continue generating positive and sustainable returns from the business” cent. Why are you doing so much worse than BOV? We do not comment on other companies. As stated earlier, from our perspective, we have a different business model and risk appetite.

HSBC Group announced that it would shed 50,000 jobs to save $5 billion annually by 2017.

What will happen in Malta?

That announcement was part of a group strategy update made in the last few months with a view to deploy group resources where there is growth. Each business and geography is reviewed regularly by the group using the six filters, which cover financial metrics as well as filters such as risk, connectivity and scale. Malta performs well in terms of most filters and we are working hard to make sure Malta becomes more globally connected – hence our Malta Trade for

Growth proposition and the €50 million and more recent €75 million trade funds. We continue to invest in Malta especially in the digital channels such as Mobile Banking App and the GetRate facility on HSBC Net, the modernisation of our ATMs and self-service machines, and the more recent opening of our International Banking Centre in Sliema.

Your collective agreement expired in 2013 but is still being negotiated. Communication with the union cannot be that good – they weren’t even invited to the announcement of the results...

We have an open dialogue with both unions and look forward to come to an agreement around the table on the collective agreement.

The group’s focus is moving very clearly towards Asia, which

now accounts for 78.3 per cent of profits. There is even talk of moving the headquarters back there, a decision to be taken by year end. How important is Europe – which contributes just 3.2 per cent to the global strategy – and that was before the sale of your Turkish operations?

Europe is still a key region for the group and, while significant investments are being made in the AsiaPac region, Europe, North Africa and the Middle East also continue to receive considerable investment.

The group is one of dozens of banks slammed for wrongdoing, from dealing in US Treasury auctions to Swiss banks helping clients avoid tax. US authorities called it “the preferred financial institution for drug traffickers and money launderers between 2006 and 2010”. Some €180.6

• Profit before tax €36m (2014: €40m) • Operating expenses €50 million (2014: €46m) • Net loans and advances to customers €3.2 billion (2014: €3.2 bn) • Return on equity 10.5% (2014: 11.6%).

• Earnings per share of 6.6 cents (2014: 7.1 cents).

• Common equity tier 1 capital ratio of 11.5 per cent (2014: 10.6%).

• Cost efficiency ratio of 55.6% (2014: 53.2%) • Total assets €7.6 billion, up 7%.

• Net impairment charges €3.6 million (2014: €1.6 million) billion passed through Geneva.

And yet you describe yourselves as “one of the industry’s most valuable brands”... Really?

I refer you to the various group communications and reports issued in the past months on these matters.

Your chairman Douglas Flint said at the last AGM that the bank’s job was to demonstrate that “the business model can accommodate the revised cost structure public policy (that) now demands while still producing attractive returns to shareholders”. That just about sums it up, no? Mission impossible!

Our strategy is to be the leading international bank and connect our customers to opportunities using our platform in 72 countries. Over the past years, unprecedented changes have taken place in the industry as well as within the group.

Clearly the operating and market environment remains challenging.

From our perspective in Malta, I am optimistic that we can continue generating positive and sustainable returns from the business.

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e Business OBSERVER | August 13, 2015

CASE STUDY

A matter of (fiduciary) trust

In February 2013, Joe Cordina had a lot to smile about. His company, Joe Cordina and Associates, was thriving from its premises in Victoria. Another company he ran with Martin Fenech and Charles Scerri – Intershore Fiduciary Services Ltd – was also carving out a share of the financial services market. And with six years of success as the Xagħra mayor, he was feeling quite confident of his chances in the general election.

Everything changed when the news broke about the oil trading scandal and Intershore Fiduciary Services Ltd was linked to that of George Farrugia. It eventually emerged that

Mr Farrugia has a company called Aikon Ltd, whose shares were held by Intershore on a fiduciary basis. Mr Cordina, one of the fiduciary directors, found himself at the centre of a media storm and withdrew his candidature just weeks before the general election. The disappointment is still clear on his face, and his challenging appointment as the Gozo Channel Co. Ltd chairman soon after the election did little to make up for the lost opportunity.

“I felt that the whole fiduciary concept was too complicated for people to understand given all the media frenzy... With

“It was later clear that Intershore had nothing to do with it at all”

claims emerging that George Farrugia had made so many millions over the years, everyone just assumed that I had also made significant amounts but it was later clear that Intershore had nothing to do with it at all. In fact the police did not even question me,” he said.

As it happens, Mr Farrugia had routed money through a personal account in New York, not through Aikon Ltd, but it merely cast another shadow over the whole concept of a fiduciary company. Why would the real owners of a company want to hide behind a fiduciary, and why a fiduciary company

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CASE STUDY

would want to take on the responsibility of the actual owner’s actions – often for fees amounting to a few hundred euros?

A similar case recently made the headlines, when David Gonzi was listed as a suspect by Italian investigators after his name cropped up in several gaming companies allegedly run by the Mafia. His name emerged as a result of his one-third shareholding and directorship in GVM Holdings, a company that provides fiduciary services – with the gaming companies as clients.

This case highlights the problem with nominee companies: why would they want to camouflage their identity if they have nothing to hide? Mr Cordina strongly disputes this perception, however, drawing on his years of experience.

“There are a number of perfectly reasonable scenarios why people might want this set-up.

They might not want their relatives or estranged spouses to know about their business dealings. They may want to buy a property without revealing their intentions for it, because otherwise the price would go up, for example. Foreigners might want to avoid – not evade – tax. In fact, some people allow time to pass and then change the shareholding back into their own name,” he said.

He stressed that the fiduciary relationship is built on trust – as the name implies – and that this goes both ways.

“They trust you to be the director and shareholder on their behalf. After all, with just a piece of paper appointing you as his nominee, he is giving you access to all the money in that company.

“On the other hand, we need to know who the client is, what his business is and so on.”

In the case of the oil trading scandal, this did not help. Dr Martin Fenech was his legal adviser, but as Mr Cordina lamented, “the unpleasant truth is that if someone wants to deceive you they will find a way”.

The amount of due diligence done on a client is quite rigorous – and in the case of directorship, it is even more as this brings with it considerably more onerous duties.

“If he is using the company to buy drugs, for example, you are the one signing the cheques.

It is as though you are buying them!” he said.

He admitted that with fiduciary companies often taking on directorships of dozens of companies at a time, there is a huge workload monitoring all their accounts and attending board meetings.

“It can be done, although of course it depends on the individual and how seriously he takes his work. It also depends on how wary he is of the risk. If you are involved in trusts and fiduciary services, you

JOE CORDINA

“e amount of due diligence done on a client is quite rigorous – and in the case of directorship, it is even more as this brings with it considerably more onerous duties”

should be aware and take precautions.

The story of George Farrugia would not have been affected by any amount of due diligence, for example.

“With foreign clients, you have to really do your work carefully and professionally. You need to look at their background, whether the money is with a reputable bank and what their line of business is. I very often visit them overseas before taking them on as clients. As I said, though, the risk of being deceived is always there,” he shrugged.

Finance Minister Edward Scicluna recently told the Times of Malta that a review of fiduciary and gaming legislation was under way, but Mr Cordina still believes there is a place for fiduciary services.

“Just because there might be one bad apple out of thousands, does not mean that you avoid all the rest.”

Mr Farrugia has long since then licked his wounds and moved on. Intershore Fiduciary Services Ltd was rebranded to dissociate its name from the oil trading scandal. His own company was negatively affected for a few months but his longstanding reputation helped the issue to die down quicker than it otherwise might have done. It remains the largest accountancy firms in Gozo.

The firm handles a wide spectrum of clients from almost all the economic sectors, mostly SMEs. This – as well as his ongoing political involvement – puts him in a privileged situation when it comes to taking the pulse of the economy – and he believes that there is one particular factor which is slowing down its recovery: long credit periods affecting cash flow.

“The problem in Gozo is much more acute than in Malta, with most companies reporting payment periods of well over 100 days. The problem is that everyone knows each other so well so people are much more reluctant to be strict with creditors who are in arrears.

“Of course, this is compounded by the fact that banks are also tightening up credit. I used to work at Bank of Valletta over 20 years ago and the difference is dramatic: there are a lot more rules and regulations, and no longer as much discretion based on ‘know your customer’. Something needs to be done as large businesses can usually manage but small businesses need help.”

He is philosophical about what happened two years ago, and the experience has not made him bitter.

“If you have a strong character, you keep going. You have to have a thick skin... otherwise I would not have even considered politics,” he smiled.

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e Business Observer is Malta’s leading business newspaper distributed with Times of Malta every fortnight.

Editorial Vanessa Macdonald, Head of Content (Business), Times of Malta.

EDITORIAL

e weakest link in money laundering The revelation that a Maltese gaming company was allegedly serving as a vehicle for Mafia money laundering is not something that can be taken lightly. Quite the contrary. It is a wake-up call that should be heeded.

It is only to be expected that the authorities and stakeholders will insist that the sector is sound and robust, well regulated and well supervised. It is also painfully obvious that those with criminal intent will target the weakest link.

The stronger and more respected the reputation, the smaller the negative impact will be of ‘bad news’, such as the alleged Mafia links of Uniq Group (Betuniq) and Betsolution4U – and the quicker it will recover its former standing.

In an ideal world, a regulator would create a foolproof structure with no loopholes. The reality is that there is dirty money out there trying to find a way into the legitimate system. Make no mistake: the threats are real. The Financial Intelligence Analysis Unit has been strengthening its compliance enforcement and received a record 202 suspicious transaction reports in 2014.

In the past criminals sought out ventures likes land-based casinos, where large sums of cash change hands. The internet and virtual currencies made this woefully outdated, offering myriad ways to move enormous sums of money without trace.

And criminals are quite happy to forfeit a considerable percentage of that money in order to launder the remainder. This is why they also invest in businesses that will clearly run at a loss – including restaurants and hotels – as long as some of the dirty money is diluted with legitimate income and thereby ‘cleaned’.

It is also obvious that shady characters with large amounts of money would seek out prominent firms and businessmen – some of whom unwisely suspend their better judgement – to give them credibility as their partners or directors.

Financial institutions are on the whole far too well scrutinised to be exploited for money laundering: all transactions over a certain amount must be reported, and staff are also savvy enough nowadays to report repeated transactions which fall just below the threshold. Credit cards accounts, on the other hand, should be viewed with suspicion – especially if they operate with large credit limits.

Criminals may also use fiduciary relationships to hide their identity, and the source of their money. The companies that provide fiduciary services undertake due diligence but how scrupulously is entirely down to the professionalism of the operator.

When firms as professional as GVM Holdings can be caught out by Mafia links, you have to ask how many less thorough firms may inadvertently be caught in a web of deceit – either through negligence or naivete.

There may be numerous legitimate reasons why a business owner would not want to reveal their identity, as Joe Cordina explains (see pages 12 and 13).

But let us not be naive: there is a very fine line between privacy and secrecy. And the reputational risk to Malta is only as strong as the weakest link.

In the near future, the 4th Anti-Money Laundering Directive will mean that a variety of stakeholders from the police to the FIAU and service providers like auditors, banks and lawyers will have access to the true owners of nominee companies. Gaming will thankfully also be covered.

As Paul Bonello said in Times of Malta (August 11) there is no need to throw the baby out with the bathwater. Let’s just hope that no other stories emerge before we are in a position to bolster our defences against them.

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BUSINESS OPINION

When private purpose becomes public

Daniel Buttigieg When expropriating private property for a public purpose, the State is allowed a wide margin of discretion in determining what constitutes a public purpose. The Land Acquisition (Public Purposes) Ordinance describes public purpose as any purpose connected with government use, public use or any use which is ancillary to the public interest or utility and this irrespective of whether the land is to be used by the government or otherwise.

The term public purpose has always been interpreted in a general manner by both the Constitutional Court and the European Court of Human Rights (ECHR) who consider that it is the use intended for the expropriated property which determines whether the property was expropriated for a public purpose, this independently from whether it is being used by a private person or a public authority. Therefore, public interest is not dependant on who is making use of the property, but on its use.

“e State may choose to expropriate a property if the use intended for the property will be advantageous to the public” In implementing social, cultural and economic policies, the State is given a wide margin in determining what is in the public interest, since the State may choose to expropriate a property if the use intended for the property will be advantageous to the public. The State’s discretion may only be contested when, in light of specific circumstances, the purpose for which the property was expropriated was manifestly unjust and unreasonable.

The fact that a private individual or company benefits directly

or indirectly from an expropriation order, even if the individual is making a profit from the use being made from property, does not necessarily mean that the expropriation breaches one’s property rights, if the use being made is advantageous economically, socially or culturally to the public in general. However, despite the ample margin of discretion afforded to the State, a fair balance must be struck between the public interest for which the property was expropriated and the owner’s property rights. This

balance is achieved by the owner being adequately compensated for the property expropriated so that he does not suffer an unjust and excessive burden.

Both the ECHR and the Constitutional Court have constantly considered that the court should not interfere in the State’s determination on the use of expropriated land, since the State is in a better position to determine its needs in implementing its policies. This, however, does not preclude the courts from ensuring that a fair balance is struck by

ordering the payment of adequate compensation which reflects the property’s market price.

Although the definition of public purpose may seem to give the State the power to expropriate any property for any reason whatsoever, each expropriation must be dealt with subjectively, taking into consideration the advantage derived by the public from the use intended. It is the role of the courts to ultimately ensure that an expropriation order is not issued frivolously or vindictively.

Unfortunately, the wide margin of discretion afforded to the State creates a situation whereby expropriation need not be used as a last resort since the State is not obliged to consider the viability of the project using property already owned by the State. Moreover the State also has the power to expropriate property if the use being made of such property, even if used by a private individual or company, is economically advantageous or will result in an increase in employment. This can create an unjust situation whereby private property is forcefully taken from one citizen to be given to another simply because the use intended will generate more economic activity. www.fenechlaw.com This article is not intended to offer professional advice and you should not act upon the matters referred to in it without seeking specific advice.

Daniel Buttigieg is a lawyer with Fenech & Fenech Advocates.

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APPOINTMENTS

FROM LEFT: TINA LOMBARDI, ALAN BORG AND KARL DANDLER

Vice-chairman for Farsons

TIMOTHY ZAMMIT

Simonds Farsons Cisk plc has appointed Marcantonio Stagno D’Alcontres as vice-chairman, taking over from Vincent Curmi, who served for 37 years as a director.

Mr Stagno D’Alcontres has been a director of Simonds Farsons Cisk plc for the past 13 years. He is a senior banker with more than 30 years of international banking experience, most recently at Arab Bank plc, Amman, later Europe Arab Bank plc, as executive country manager for Italy until 2009. He was then appointed adviser to the Prime Minister’s Office for the Economic Development of Italy’s southern regions.

MIA’s new CFO, head of strategy Karl Dandler will succeed Austin Calleja as the chief financial officer at Malta International Airport on September 1, when he retires after 24 years of service.

Mr Dandler has a wealth of experience in the aviation sector, having previously been CEO for Kosice International Airport. Prior to that he spent over a decade with Austrian Airlines where he held various positions, including financial controller and eventually deputy president.

MIA will also be appointing Tina Lombardi as head of strategy and business development as of September 2. She joined the company in 2007 and has managed the business development team for the past five years.

MIA also announced that Christine Camilleri has resigned as head of human resources.

Director at RSM Malta

MARCANTONIO STAGNO D’ALCONTRES

Communications head at InterContinental Malta InterContinental Malta has appointed Louise Pullicino as director of communications.

Her career in hospitality spans over 15 years. She worked for Corinthia Hotels in a number of positions both at their St Julian’s and London properties. Her more recent career saw Ms Pullicino move into developmental roles at the

Infinitely Xara Group and, most recently, at Casa Ellul in Valletta.

Ms Pullicino has set her sights on the successful launch of the Highline Suites and will be leading the property’s repositioning as ‘The Mediterranean’s leading hotel of distinction that defines new luxury in Malta’.

Audit, tax and advisory firms RSM Malta has appointed Timothy Zammit as director within the tax and corporate service line.

Dr Zammit will be overseeing the tax and corporate team under the guidance of the partner responsible – George Gregory – with additional specific responsibility to develop the firm’s services in the tax, corporate, estate planning and financial services sectors.

Dr Zammit has been the tax lawyer at the firm for a number of years, primarily responsible for advising clients on international and domestic corporate structures while assisting clients with their tax planning requirements.

LOUISE PULLICINO

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STOCK MARKET ?? REVIEW

HSBC’s performance once again impacted by higher costs and impairments

Edward Rizzo HSBC Bank Malta plc published its interim financial statements on August 3, showing an 8.3 per cent decline in pre-tax profits to €36.3 million. During the first half of 2015, total operating income actually edged 2.8 per cent higher to €89.8 million but costs grew by 7.7 per cent to €49 million and net impairments increased by €2 million.

The figures over recent years clearly indicate that HSBC Bank Malta’s financial performance is being mainly impacted by higher costs and impairments apart from the de-risking strategy taking place and the pressures arising from the low interest rate environment.

During the first six months of 2015, the higher staff costs mainly related to the increased pool of human resources in the risk and compliance areas, as well as the additional contributions to the Depositor Compensation Scheme and the new requirement for contributions to the Single Resolution Fund (a pool of money financed by the banks across the European Banking Union which was set up to ensure that medium-term funding support is available while a credit institution is being restructured).

This higher level of expenditure should come as no surprise given the clear message by HSBC’s chairman, Sonny Portelli, in his address to shareholders in the last two annual reports in which he warned of “a substantial rise in regulatory costs”.

Further regulatory changes are being discussed across Europe and

“Future dividends are more likely to mirror movements in profitability assuming the bank can build up its capital base sufficiently by maintaining a payout ratio of 55 per cent” the ECB is currently in the process of publishing guidelines on national deposit compensation schemes, establishing new rules in relation to a resolution fund across the eurozone and setting the fees that will be charged for its new oversight role of around 130 financial institutions across Europe. These changes will lead to additional costs for HSBC Bank Malta and other banks across Malta and the eurozone.

During the first half of 2015, HSBC also reported higher costs as a result of currency fluctuations related to outsourced services and the expenses incurred in connection with the newly transferred insurance portfolio.

Moreover, loan impairments increased by €2.2 million during the period under review to €3.6 million. This figure comprises €15.9 million (HY2014: €3.2 million) in new impairments and €12.4 million (HY2014: €1.8 million) in reversals of previous charges. HSBC Bank Malta’s CEO

Mark Watkinson described the overall level of impairments registered in the first half of 2015 as being more “normalised” given the regulatory environment and he expects this level of impairment to recur in future reporting periods.

In addition to this challenging cost scenario, banks are also struggling in the current low interest rate environment while HSBC Bank Malta is also undergoing its de-risking strategy.

Some years ago, HSBC Bank Malta adopted the group-wide strategy of de-risking the business which entailed running down various profitable operations, namely the business of trusts, custody and brokerage. Mr Watkinson acknowledges that this was a painful decision due to the immediate negative impact on earnings, although the overriding objective is to transform the bank into an entity providing more reasonable risk/return metrics. In fact, net fee and commission income declined from €17 million

in the first half of 2010 and 2011 to just over €15 million during the sixmonth period under review.

However, this transformation must be seen in the context of the continuous change in regulations. This was clearly summarised by the CEO in his address to shareholders in the 2014 annual report in which he noted that HSBC’s strategy is to build “a strong and sustainable business for the long term”.

With respect to net interest income, although this improved slightly to €60 million during the first half of the 2015 financial year, HSBC Malta – similar to other institutions across the banking sector – are being negatively impacted by the continuing low interest environment.

This is in fact impacting banks on several fronts. Deposits are continuing to rise despite the significant decline in interest rates over the years. Since interest rates on deposits are still in positive territory, this implies an expense

for any bank. Furthermore, banks have limited opportunities in which to employ excess liquidity – representing the difference between the level of deposits and the amount of loans (either to corporates or retail customers) – by investing in fixedincome instruments or placements with other banks, including the European Central Bank.

While many would have expected the low interest rate scenario to benefit banks since it would be cheaper for individuals and corporates to take on additional borrowing, the reverse is actually happening. Due to the low interest rate on deposits and lack of investment opportunities, many retail and corporate borrowers are using some of their own excess liquidity to repay loans. In fact, during the first six months of the year, loans and advances to customers at HSBC Malta declined by 0.8 per cent.

These challenging conditions can be further evidenced from a review over a slightly longer-term period.

Since June 2010, HSBC Malta’s deposit base grew by €1 billion while the loan book grew by a mere €44 million translating into a decline in the advances to deposits ratio from 0.77 times in 2010 and 2011 to 0.62 times as at June 2015.

Shareholders generally are likely to have been disappointed with the 8.3 per cent decline in profits during the first half of the year. However, they must have been pleasantly surprised with the higher level of their interim dividend this year which, after taking into account the additional shares distributed earlier this year as part of the bonus issue, has indeed improved by 25 per cent.

This is solely due to the implementation of Banking Rule 09 (BR09), which requires banks to hold additional reserves against nonperforming loans. Banks had a three-year transitory period to build up this reserve and to come into line with this new obligation. Thereafter, the level of reserves needs to be maintained in line with any changes to non-performing loans. HSBC had

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STOCK MARKET REVIEW

provided for the initial contribution in 2013 and increased this to 85 per cent of the overall requirement during the 2014 financial year. The final balance necessary was provided for from this year’s interim dividend.

During the meeting with financial analysts last week, HSBC Malta’s CFO Rashid Daurov explained how the interim dividend was calculated. He confirmed that HSBC’s dividend payout ratio remained unchanged at 55 per cent, implying a gross dividend of €0.056 per share before taking into account BR09, compared to €0.0603 per share in June 2014 – the difference being the decline in profits during the first half of 2015. However, since HSBC was 85 per cent compliant as at the end of 2014, it only required a small topup in the first half of 2015 when compared to the more aggressive contribution during 2014. As such, the 2015 interim dividend of €0.051 per share represents a 25.9 per cent improvement over the June 2014 dividend which was more heavily impacted by BR09. Since HSBC is now fully compliant with BR09, future dividends are more likely to mirror movements in profitability assuming the bank can build up its capital base sufficiently by maintaining a payout ratio of 55 per cent.

Despite the significant challenges across the banking industry both from an operational aspect as well

as from a regulatory perspective, which led to a significant reduction in annualised post-tax return on equity to 10.6 per cent compared to 19.3 per cent in 2011, HSBC Bank Malta believes that the positive performance of many sectors across the Maltese economy will positively impact HSBC and other banking institutions in the medium term.

Mr Watkinson also made reference to the expected growth in the

loan book given the large amount of loans already sanctioned but not yet drawn down. As at June 30, 2015, these amounted to €462 million and are expected to be gradually drawn down over the next 12 months.

While this would be a positive development, it would only partially satisfy HSBC’s goal of improving the loan to deposit ratio to above 80 per cent from the current

level of 62.5 per cent. This could only come about if several large projects come to fruition and HSBC agrees to participate in any bank financing being required.

HSBC and other Maltese banks need a strong increase in loans to generate additional interest income since the low interest rate environment across the eurozone is likely to remain unchanged for many more years to come.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2015 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

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BUSINESS ??UPDATES

Malta’s Best Real Estate Entrepreneur of the Year

Focus on Bank of Valletta Trade Finance Centre Arguably one of the oldest forms of banking, trade finance has undergone significant changes over the years.

Bank of Valletta set up Trade Finance Centre in 1993 to centralise its processes. However, there is more to it than process management, and this is what the BOV team at Trade Finance Unit excels at.

Trade finance has always been an integral part of the services offered by the bank but it has been given considerably more importance as demand evolved.

“International trade is governed by universallyaccepted rules but that is not enough. To be successful you need to appreciate cultural issues, perceptions and the characteristics of particular markets, and the political, economic and environmental issues in which

such trade takes place. You also need to develop an instinct that warns you of risk when a transaction looks good on paper, but is not,” explained Carmel Borg, who heads the unit.

BOV has been named the Best Trade Finance Bank Award for Malta by Global Finance for three years in a row.

“Our achievements in this sector show our commitment to be an enabler and a long-term partner to corporates and entrepreneurs who seek to grow their business, even in times of adversity. Our approach in this field reflects our strategic vision – to remain forward looking and continuously reinvent ourselves. It is only in this manner that we can truly be the financial partner of choice for our customers.”

Bernard Mangion, managing director of Ben Estates, was recently awarded Malta’s Best Real Estate Entrepreneur of the Year Award for 2015. Having devoted his career to developing real estate properties that anchor communities, promote further development and spread economic prosperity, the award comes after six years of hard work which has seen him grow his business into one which is recognised and respected.

Success has certainly not come easy however, and Mr Mangion chalks it up to being honest, disciplined, knowing when to take risks, and being a salesperson as well as an assertive leader that evokes inspiration and persistence.

Kicking off the business in the midst of the global recession in December 2008, and at a time in which the property market in Malta was slow, Mr Mangion is not one to shy away from a challenge.

“One must take up challenges with a pinch of salt, face your fears and, most importantly, think big!” he said.

Above all, however, the success of Ben Estates Ltd is down to the entire team that make up the company.

“A business is successful when the whole team is pulling the same rope, in the same direction. Together we will be successful, but on your own it is impossible to be close to success,” he said.

(FROM LEFT) SALES CONSULTANTS TOMMY DEBONO, MARIKA DEBONO, CLAUDIA PARASCANDALO, DEBORAH PARIS, MANAGING DIRECTOR BERNARD MANGION, SALES CONSULTANTS CLAUDIA SCHRANZ AND FRANCESCA SAMMUT, AND IT CONSULTANT KEITH CAUCHI.

An exciting property A. Lange & Söhne arrives in Malta investment opportunity Located within a 250-year-old fort and dating back to the Knights of St John, Fort Chambray Development offers an exciting property investment opportunity. Nestled on a cliff overlooking Mġarr Harbour, it boasts of spectacular sea and country views. Within the protected bastion walls, the fort is to flourish into a self-contained town. Residential areas promise to be quiet, landscaped havens, while the commercial area will be bustling and full of life, once the imposing building of the Knights’ Barracks and the Polverista are restored to cater for fine dining restaurants, cafes, bars and other commercial outlets.

The development comprises a mix of villas (some with private pools), maisonettes, single floor units with spacious terraces and duplex units with privately-owned roof terraces. All properties have natural light throughout. The complex is complemented with communal pools, deck areas and landscaped gardens. The third phase will also include an upmarket hotel and a commercial area.

Property is sold freehold. Fort Chambray is a Special Designated Area. Prices start from €198,000. Visit www.fortchambray.com or call 2156 4910/ 7956 0019 for more information.

Edwards Lowell, long established in high-end timepieces and jewellery, has recently announced it will be representing A. Lange & Söhne, the German watchmakers renowned for their former affiliation with the kings of Saxony, in Malta.

With a history spanning many centuries, this brand has now established itself as one of the leaders among the world’s best watch producers and, today, it only produces a few thousand pieces a year. Each of these is made from the finest materials, and is powered exclusively by watch movements that have been developed in-house and assembled by hand.

Lange & Söhne’s greatest successes include innovative time-keeping instruments such as the Lange 1, with the first outsize date in a series produced wristwatch, as well as the Zeitwerk, with its supremely legible, precisely jumping numerals. The brand has also sponsored the Concorso d’Eleganza Villa d’Este for many years.

At the recent launch in Malta, both Luca Dondi, A. Lange & Söhne’s general director for central, southwest Europe, Russia and CIS, as well as one of only five engravers working on the miniscule components of each Lange & Söhne timepiece, were invited to formally launch the Saxon brand in Malta.

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BUSINESS ??UPDATES

Refined cuisine at De Robertis De Robertis is one of the largest established restaurants in Valletta. Located across the road from Auberge de Castille, the restaurant is well-known for its refined cuisine at affordable prices.

The open-air terrace dining area enjoys spectacular views of Valletta, the Grand Harbour and surrounding towns, providing a very romantic setting at night with glimmering lights of the towns beneath.

The menu includes a fusion of Italian, Mediterranean, French, and local cuisine, all beautifully presented to patrons in a lavish way by the friendly staff, making De Robertis one of the best venues for an informal business lunch or romantic dinner in Valletta.

The restaurant also caters for group lunches and staff parties with set menus, tailor-made to the client’s taste and budget.

De Robertis is open from Monday to Sunday 12-2.30pm, 7-10pm.

It is located at Castille Hotel, Castille Square, Valletta. For more information and reservations, call 2124 3677/8 or 2122 0173; fax 2124 3679; send an e-mail to info@hotelcastillemalta.com or visit www.hotelcastillemalta.com.

Fexserv Financial Services celebrates 20 years of operations in Malta at Couvre Porte, Vittoriosa The Couvre Porte in Vittoriosa was recently the setting for the celebrations by Fexserv Financial Services on their 20th anniversary since setting up operations in Malta. A multitude of local guests made up of clients, agents and staff members, as well as a number of representatives from Fexserv’s foreign partners, were present to mark this milestone.

The organisation’s achievements were recalled through a video presentation and commemorative speeches from one of the company directors, Pa Nolan, and chairman Tony Zahra.

Mr Nolan recalled the early days of coming to Malta together with a colleague from Fexco in Ireland in 1995, to help set up

Fexco Malta and assist in the knowledge transfer process to Maltese employees. He then went on to thank the customers and staff for their loyalty throughout the years.

Mr Zahra also recalled early memories, and took the opportunity to thank his fellow directors for their sterling support in directing the company to what it is today. He

stated that financial services is now one of the main pillars of the economy and is looking brightly to the future that this industry can have in Malta. He concluded by hinting that Fexserv will be launching an exciting new financial service in Malta early next year, through which it will be doubling the present staff complement.