Malta is emerging as a likely possible location for a subsidiary of Lloyds of London after Brexit, as discussions between the insurance firm, the Malta Financial Services Authority, and a local law firm intensify.
According to sources who spoke to The Business Observer, Lloyds is considering opening a subsidiary in Malta, which could take the form of protected cell company. This kind of structure has already proved to be very attractive for insurance companies. Other sources which spoke to the same paper said that a delegation from Lloyds had been sent to Malta last month, putting Malta at the forefront as a potential candidate.
Lloyds announced a few months ago that it wanted to open an office in another EU member state as soon as UK Prime Minister Theresa May set article 50 in motion, triggering procedures for Britain to leave the EU. While the company was initially considering Dublin, Paris and Frankfurt, by October, Lloyds CEO Inga Beale confirmed that Malta and Luxembourg had been added to the list.
The issue that concerns Lloyds and other financial institutions the most is the potential loss of their passporting rights, which allow them to conduct business from one jurisdiction in all the other member states. The loss of these passporting rights would cost Lloyds around £800m in premiums, around 4% of its total. In 2015, the European Economic Area (EEA) accounted for £2.93bn or 11% of Lloyd's gross written premium.
While the firm is set on keeping its 328-year-old base in London, its top brass would likely move to the new subsidiary, which would have to be capitalised separately, running into tens of millions.
Lloyds made a profit in the first half of 2016 of £1.46bn. It has a general legal representative in Malta, Lloyds Malta Ltd, with lawyer Louis Cassar Pullicino as its director.
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