Finance News

Sparkasse Bank Malta and the Fund Industry

Established in 2000, Sparkasse Bank Malta plc has offered banking and investment services to fund managers in Malta for over 15 years. Throughout its long history, the vision has always been to deliver value to customers by offering quality, professional, and effective services through a dedicated and talented team of professionals. Managing Director Paul Mifsud has played a role in this work for over 15 years. 

“When I joined in 2007, the bank was primarily focused on banking rather than investment services,” shares Mifsud. “Since my background is in asset management, one of my goals was to transform the bank into an investment services bank by developing a strong investment services arm in trading, settlement and custody  This set us apart from all the other banks on the island at the time especially when Malta was establishing itself as an emerging fund jurisdiction.”

The credit institution saw a gap in the marketplace that needed to be filled. At the time, Malta was growing rapidly as a financial services hub. The fund industry was embryonic but highly dynamic. Seeing the potential need for service providers, the bank stepped up to offer a banking solution with built-in custody. With very few other providers in the market at the time, many asset managers turned to the bank to meet their needs. 

As such, the bank owes much of its success to pursuing a niche audience focused mainly on investment and custody services. From early on, the bank aimed to attract funds and investment managers looking for a financial institution that understood their exact requirements. It set itself apart as a smaller custody and depository services provider that could offer more guidance and solutions than larger international institutions may be willing to offer.

Mifsud explains: “We found that we have a niche as a credit institution focusing mainly on a typology of customer that is a fund. A fund is an entity that can come in different forms, from a unit trust to a limited partnership (LP) or the more popular SICAV structure. We can provide customers with the security of being a bank credit institution with a robust infrastructure and a competent team of professionals willing to assist and provide solutions.

To conduct its business, the bank holds a total of four licences to allow it to carry out its business. It acts not only as a credit institution but also as an investment services firm for both individuals and corporations and a depositary/custodian for funds. These are not services typically offered by most financial institutions. Of these licences, three were issued by the Malta Financial Services Authority, and one was issued by the Central Bank of Ireland to act as depositary to Irish funds. This array of services gives Sparkasse Bank Malta a competitive advantage because it can offer its customers an array of services from one banking platform. ‘’Customers can access banking and investment services from one account with the bank making the transition between banking and investments seamless’’ says Mifsud 

 As a depository, we also provide the oversight that is necessary as part of our licensing condition and for funds to meet regulatory requirements.”

This strategy certainly seems to have been effective for Sparkasse Bank Malta. The bank now employs over 100 people and holds approximately €8.2 billion in assets under custody. It has fuelled this growth by investing in IT infrastructure and human resources. By embracing a technologically innovative approach, including automating depository functions, the bank has been able to sustain its growth and keep up with its growing customer base. Indeed, automation has improved efficiency and reduced the burden on employees to complete tasks manually. 

Certainly, the bank’s location in Malta has also been crucial in its success. A success the bank next seeks to emulate in Ireland as in 2018, Sparkasse Bank Malta established a branch in Dublin to act as a depository to Irish licenced funds. 

As for what’s next, Mifsud says Sparkasse Bank Malta likes to keep things simple. He notes that the bank’s culture does not advocate taking unnecessary risks and specialises in services where it feels it has the right competencies and knowledge. “If we don’t have the expertise around something, or there is no surety of law, or we can’t handle something because of bandwidth or resources, we don’t get involved.” According to Paul Mifsud, the bank plans to continue pursuing its areas of expertise, which lie in providing custody and depository services and advisory and non-advisory services to customers. 

Banking is already complicated; there is no need to make things more complicated. We’re focusing on what we’ve been doing and what we know how to do well, without having those distractions of trying to create something else that could take our eye off the ball and away from our main priority, which is our customers.”

Hugh Grant

Hugh Grant is a technology researcher who is always staying up to date on the latest tech news, trends and innovations.

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