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Economy and Banking Sector of Malta

Malta
Location
Mediterranean Sea
Population  (2016)
434 403  (+0.01%)
EU Status
member since 2004
Currency
EUR (Euro)
Nominal GDP (2015)
8.8 bln EUR  (+0.10%)
Credit Ratings (as of Sep 2016)
A/A3/BBB+
Consolidated Banking Assets (2015)
47 139.99 mln EUR  (-9.16%)
Deposit Guarantee
100 000 EUR
Number of Banks
28

Malta is a Southern European island country, located in an archipelago in the Mediterranean Sea. Malta is a member of the European Union since 2004 and of the Economic Monetary Union (Eurozone) since 2008.

Malta is an advanced economy, possessing favourable geographic location and productive labour force. Malta's main industries are electronics, ship building and repair, construction, food and beverages, pharmaceuticals; key services sectors of the Maltese economy are tourism and aviation services, financial and information technology services.

Malta is establishing itself as an international banking centre and hub for finance in the Mediterranean region. Malta's banking sector has transformed from one having several retail banks serving the local population to a diversified landscape with domestic and foreign-controlled banks, providing a variety of solutions from traditional retail banking products to sofisticated customized private banking, wealth management and corporate banking products.

List of Banks in Malta

National Currency

Euro (EUR)

Malta joined the Euro Area on 1 January 2008. The preceding national currency, Maltese lira (MTL), was replaced by Euro.

GDP

Nominal GDP (2015)Nominal GDP per Capita (2015)Real GDP Growth (2015)
8.8 bln EUR  (+0.10%)20 400 EUR  (+0.09%)6.3 %  (2014: 3.5 %)

According to Eurostat, nominal GDP of Malta in 2015 was 8.8 bln EUR.

Malta outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.5% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 6.3% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Malta. Chart 1. Real GDP Growth in Malta. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Malta was 20 400 EUR.

Malta has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -5.5% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Malta; European Union = 100. Chart 2. GDP Per Capita at Purchasing Power Parity in Malta; European Union = 100.

Inflation Rate

CPI, MoM (Dec 2016)CPI, YoY (Dec 2016)CPI, Year Average (2016)
0.1 %  (Nov 2016: -2.2 %)1.0 %  (Nov 2016: 0.8 %)0.9 %  (2015: 1.2 %)

According to Eurostat, inflation rate in Malta in 2016 expressed as annual percentages of average consumer prices was 0.9% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2021 are IMF's estimates.

Inflation Rate in Malta. Chart 3. Inflation Rate in Malta. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2015)
5.4 %  (2014: 5.9 %)

Government Bond Yield

Government Bond Yield (Dec 2016)
0.82 %  (Nov 2016: 0.84 %)

Credit Ratings (as of Sep 2016)

Fitch Moody's S&P
A (high credit quality), outlook positive A3 (upper medium grade), outlook stable BBB+ (lower medium grade)

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Malta: 0.0 - 15.0%

Withholding tax rates applied on payments of interest and dividends in Malta are shown in Table 1.

Dividends Interest
Natural person, resident 15.0 %15.0 %
Natural person, non-resident 0.0 %0.0 %
Table 1. Withholding tax rates in Malta.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Malta: 72 Signed Agreements

Malta signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Australia
 Austria
 Bahrain
 Barbados
 Belgium
 Bulgaria
 Canada
 China
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Egypt
 Estonia
 Finland
 France
 Georgia
 Germany
 Greece
 Guernsey (Mar 2013)
 Hong Kong
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Israel (Dec 2013)
 Italy
 Jersey
 Jordan
 Korea, Republic of
 Kuwait
 Latvia
 Lebanon
 Libya
 Lithuania
 Luxembourg
 Malaysia
 Montenegro
 Morocco
 Netherlands
 Norway (Feb 2013)
 Pakistan
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation (May 2014)
 San Marino
 Saudi Arabia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 Syrian Arab Republic
 Tunisia
 Turkey (Jun 2013)
 United Arab Emirates
 United Kingdom
 United States
 Uruguay

There are also several agreements between Malta and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Iceland (Apr 2013)
 Liechtenstein (Sep 2013)
 Mexico
 Moldova, Republic of (Apr 2014)
 Russian Federation

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 5 Signed Agreements

Malta signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bahamas
 Bermuda
 Gibraltar

There are also several agreements between Malta and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Cayman Islands (Nov 2013)
 Macau (May 2013)

Automatic Exchange: Starts in September 2017

Malta signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Malta
IGA in effect since 16 December 2013, Model 1

Malta has FATCA agreement with the U.S. in effect since 16 December 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Malta are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Maltese financial accounts hold in U.S. financial institutions will be reported to Maltese authorities.

Further Information

Financial Market Development

Financial Market Development
4.4 (max 7.0), 41st out of 138 countries
Banks' Soundness
5.9 (max 7.0), 16th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Malta is scored 4.4 out of maximum 7.0 and ranked 41st out of 138 analysed economies. Soundness of banks is scored 5.9 bringing Malta into the 16th place, trustworthiness and confidence of financial market is scored 4.5 (51st place).

Financial Market Development in Malta. Chart 4. Financial Market Development in Malta. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Malta are summarised in Table 2.

Scheme Participantsall credit institutions operating in Malta, branches of non-EEA banks, branches of Maltese banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Covered Accountsmost types of deposit are covered, including current, deposit and savings accounts
Maximum Protected Amount100 000 EUR
Paid In Currencyin the same currency as the deposit

Table 2. Deposit guarantee scheme in Malta.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
Aaa (prime) Aaa (prime)

Local currency (Euro) deposit ceiling for Malta is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Deposit Rates

Average Deposit Rate (Feb 2017, EUR)
0.77 %  (Jan 2017: 0.84 %)
In Feb 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.77% which was above the Euro Area average (0.43%).
Deposit Rates in Malta. Chart 5. Deposit Rates in Malta. Source: ECB.

Further Information

Banking Sector Structure

Number of Banks
28
Consolidated Assets (2015)
47 139.99 mln EUR  (-9.16%)
Recent Changes (2016)
new banks: 0, closed banks: 0

Currently there are 28 credit institutions operating in Malta.

Recent structural changes (2013 - 2016) of the banking sector of Malta are summarised in Table 3.

2013201420152016
Number of Opened Banks0320
Number of Closed Banks0310

Table 3. Recent structural changes in the banking sector of Malta.

The list of the most recently opened banks in Malta is provided in Table 4.

NameStart Date
 Credorax Bank Limited (new)June 2015
 Yapi Kredi Bank Malta Limited (new)January 2015
 SATABANK plc (new)November 2014
 ECCM Bank plc (new)July 2014
 PILATUS BANK PLC (new)January 2014
 

Table 4. The most recently opened banks in Malta.

All the credit institutions operating in Malta can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Banks24
Branches of foreign banks3
Central banks1

Table 5. Number of banks by category in Malta.

There are 3 branches of foreign banks from 2 different countries in Malta. Table 6 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Turkey2
 Netherlands1

Table 6. Number of branches of foreign banks in Malta grouped by country of origin.

Savings Accounts

Minimal Interest Rate 0.55 % 1 months (EUR)
Maximum Interest Rate 0.55 % 1 months (EUR)
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Time Deposit Accounts

Minimal Interest Rate 0.75 % 3 months (EUR)
Maximum Interest Rate 0.95 % 12 months (EUR)
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