Commonwealth Bank to Review its Malta Operation

Submitted by Jim Thesiger on 21 December, 2009 - 06:31

The Australia based integrated financial service provider Commonwealth Bank (CBA), which has operations in the United States, UK, China, Japan, Malta, Fiji and some other countries is currently reviewing its highly profitable structured businesses something that has put its controversial presence in Malta in doubt. It is believed that because of reputational problems along with complexity with the financial products, CBA has made a decision to wind down structured finance, something which contributes to its yearly income by more than $100 million. According to a financial services industry source, some of the senior structured finance staff of the bank was looking for their options. However, a CBA spokesman refused to make any comments about the issue and stated that it is the policy of CBA not to make comments regarding the strategic matter or the market speculations.

It is to be mentioned that CBA established its operation in Malta few years back- a country which was blacklisted as tax havens by the Australian Taxation Office. In 2005 Commonwealth Bank acquired banking license in Malta for CommBank Europe under David Murray who was the chief executive of the bank that time and Ralph Norris, the present CEO extended the operation with a $917 million capital transfer to the country in the following year. Newport came up with a net profit of $294 million after a $19 million tax credit. According to the 2009 accounts of CBA, the bank has booked a benefit worth of $55 million from lower offshore tax rates - around double its closest competitor, which suggests that the Malta structure provides a huge amount of money in tax benefits.

Although Mr. Norris recently agreed that the operation in Malta was tax-efficient but at the same time he defended it strongly claiming that the country has turned out to be an important base for his company to deal with the operations in Europe because of its EU membership.