Any business interested in commencing banking activities within Malta must formally apply in writing to the appropriate regulatory body to obtain a Maltese banking service provider licence, as stipulated under relevant legislation. Banks in Malta operate under the Banking Act and associated regulations.
Advantages of Malta for financial services
Before applying for a Maltese banking licence, note the jurisdiction's key strengths as a financial centre:
- The country enables access to the wider European single market.
- Relatively low business registration costs.
- Potential for advantageous tax structures.
Moreover, Malta's banking sector demonstrated resilience through the global financial crisis, signalling the jurisdiction's stability for licensing at domestic and international levels moving forward.
Banking sector regulation and licensing for international banks
Enacted in 1994, the Maltese Banking Act oversees all aspects of banking, transposing EU directives into local regulation.
MFSA is the regulator for Maltese banks. It licenses, supervises, and oversees banks, e-money institutions, and financial firms. The European Central Bank monitors national regulators, including MFSA, to ensure harmonized EU banking standards. Continuous monitoring and examination of banking institutions are key functions of MFSA, and on-site inspections may be conducted. Prospective licensees must detail legal obligations analysed by MFSA, with breaches incurring fines or licence suspension/revocation.
Entities conducting Maltese banking require an MFSA licence under Section 5. This primarily affects joint ventures, overseas bank branches, and local subsidiaries. Even though local subsidiaries are legally independent, they fall under the scope if they have domestic/foreign credit institution ownership.
1 of 2013
The licensing process is detailed in Banking Rule 1 of 2013 and Section 6. Applicants must write to MFSA regarding proposed operations and structure. Pre-issue, MFSA requires: Memorandum, 3-year financial statements, Business plan, details of directors, managers, major shareholders, and suggested bank managers.
Section 7 prerequisites include: Minimum capital of €5 000 000, appointment of 2 operating individuals, disclosure of the largest shareholders, shareholder suitability checks.
With submissions reviewed, MFSA then may issue an unconditional/conditional licence or reject the application. Rigorous due diligence of leadership and investors remains key.
Obtaining a Maltese banking licence empowers provision of:
- Deposit-taking from the public – withdrawable on-demand or after a set timeframe
- Borrowing/collecting funds for lending or investment
Business activities after acquiring a credit institution licence in Malta may, in addition to banking activities, include any or all of the following additional activities, subject to regulatory approval:
- Finance lease
- Payment services
- Travellers’ checks, bank bills etc.
- Guarantees and obligations
- Trading for own account/clients
- Securities offering advice
- Advising enterprises on strategy
- Brokerage and portfolio management
- Custody services
- Credit reference and storage
- E-money issuance
Entering the EU’s financial service market
A Maltese licence enables branches across the EU and EEA. The bank must notify and gain consent from the MFSA. For non-EEA jurisdictions, MFSA confirmation of reputability and absence of secrecy laws impinging supervision is necessitated. With requirements met, subsidiaries/branches can then open.
Inversely, non-Maltese banks must notify MFSA 2 months pre-opening a representative Maltese office. Activities are restricted to parent organization offerings without financial transaction execution.
The Maltese authorities work closely with the European System of Financial Supervision in accordance with Directive 2013/36/EU. Duties as EBA/ESRB members or adhering to EU banking rules cannot be limited by national powers.
In summary, those seeking Maltese banking licenses or credit institution status must apply in writing to MFSA. For assistance, contact TK Deal’s experts for licensing support and EEA regulatory advice.
Entities seeking to become licensed banks or credit institutions in Malta must submit formal written applications to the MFSA.
For expertise on Maltese banking licenses regulation across the EEA, engage TK Deal. Our specialists advise on licensing requirements, answer all queries, and provide end-to-end support for securing your Maltese authorization.
With in-depth local knowledge, extensive industry connections, and experience assisting international clients with complex licensing projects, rely on TK Deal as your trusted partner in Malta. Contact our experts today to strategize your European banking access.