In an extensive interview, Joaquim Silva Pinto, Chief Executive Officer (CEO) of Banif Bank speaks to CHARLOT ZAHRA on the Portuguese bank’s entry into the Maltese market over the past year and its plans to become a major player in a few years’ time
Why did Banif Bank set its sights on Malta?
First of all, because we found out that there was space for a new player in the financialbanking system in Malta.
Secondly, because we might also have options and solutions to bring some kind of competition to the Maltese market.
Up until now, as far as our figures show, we are completely sure that our first approaches and thoughts about this project were absolutely correct.
What are the principal factors that attracted you to set up shop here - was it the regulatory framework, the human resources, the EU market, or all of those?
By joining the eurozone, Malta became another country with all the conditions necessary to allow European banks to install themselves. But the main reason why we put Malta in our portfolio of development as far as Banif Bank is concerned was that Malta reflects the characteristics of the other markets where Banif is present, with very good and very interesting market approaches.
Therefore with the knowledge of the market, with the knowledge of the business and also with some dimensions of the market which we could very easily understand, we found that Malta could be a place where the group could expand its business, not only locally but also in Northern Africa.
How do you describe the results of your first full year of operations in Malta? Were they up to expectations?
Well, results are never good – we always want better results every year. Considering that the first year of work of the bank was done by using a maximisation approach by two branches for about six months, I would say that the results were very good as much as a result can be understood after such a big investment.
We are still finishing our investment process in 2009, we are still recuperating part of it and we are building a very good portfolio of clients.
We now have a client portfolio of 3,600 and the figure keeps growing on a daily basis, so the bank is feeling quite comfortable with the investment it is making.
We expect that in the very near future, the bank will become one with high capacity of generation of good business and good results.
Which are those areas in which you have done well?
For the time being, business, corporate and retail are the areas where the bank is stronger. This, however, does not mean that private banking is going to be left out. Private banking usually demands a high level of trust, and the bank understands that it is only a year old in the system.
This means that we have to give the public and our prospective clients a little bit more time so that the bank can be fully understood.
Trade finance is also one of those areas where we can work properly and we can do it in a very competitive way too because we are present in markets where other banks are not, seeing that more than 14 countries are covered by our services.
Which are those areas in which you would like to see an improvement?
We would like to see an improvement in the bank’s portfolio, that’s what all the banking system wants to have and Banif still needs to mature its portfolio.
We are no longer a new player; we’re becoming a relevant player in the market.
We have to take into consideration that all the banks in Malta have been there for a very long period of time, which means that we need a little bit more time in order to mature and to bring our portfolio to the size we would like.
With an increased portfolio, all the other transactional areas of the bank will come into place. We know how these things usually happen, therefore we have no doubt whatsoever on the options for the future.
Could you describe what effective measures you have taken to bring forward this improvement?
I believe that the bank is now well-known on its colours, its symbols and its major designations, but the corporate sign of the bank is already part of our strategy. The bank is increasing its presence in retail and one of the most important factors of our growth is that we are bringing ourselves nearer to the people.
We are also introducing competitive products. Such include Flexi Term and I Saver, which are completely different to those offered until now.
We are sure we can move forward with a differentiation not only on the options of the market, but also on our approach on quality of the services offered.
On its corporate website, Banif Bank describes itself as “your alternative bank”. In what ways is Banif Bank an alternative choice for banking customers in Malta?
We strongly believe that business and corporate customers should bank with more than one banker. That’s why we strongly recommend even to our customers to bank with third parties too.
Sharing the risk of clients and the clients sharing their risks across the banking system is nowadays a must in modern economies.
On the other hand, we clearly know that our options, as with everything else in our lives, have to be tested. In the business and corporate world, this sensitivity is already established. In medium-sized and large groups, this kind of feeling is already understood.
Banks are to be tested and compared by the quality of their services, the fees and the kind of treatment a company might have.
On the other hand, no bank has the final solution, so all the banks are complementary on the kind of services they offer.
What are your views on the economic recession that has hit Malta and other euro zone countries?
The impacts are those that we are seeing every day. They arrived slightly late in Malta, so we have a few more months to get prepared for it.
Nobody is yet able to find out how deep and how long this crisis can last. This is still a question without an answer.
On the other hand, we are convinced that at the end of this year, the crisis in Malta will be a little less sensitive, so things will start to turn over.
Markets, banking and financial systems need to bring trust to the market and to win back the credibility that they need in order to work forward.
Malta, being a small player in the global market, is somehow protected from the big problems. However, the problems will come and the problems are there.
The impact is a universal one and it is being felt in all countries across the world, and Malta is no exception.
I strongly believe that the Maltese, with the criteria of a savings concept, and being concerned with the quality of investment, will be more protected than some other areas of Europe and of the world where some investments have been made without major judgement or major analysis.
But, clearly, when a crisis comes, it’s for everybody. The only thing we can try is to protect some of the big risks of the crisis, and those measures can only be taken on a political level with the regulation.
Banks have to play their role during an economic crisis, and their role is to maintain the economy and maintain the companies with a capacity to move on and to go on with their business without major problems.
Which are those sectors that have been mostly hit in Malta and how has this affected your banking operations in Malta?
I think that the two main sectors that have been hit in Malta are tourism and real estate development, even because these two sectors are somehow inter-related, or at least partially.
The normal tourist will have less money to invest, thus applying some kind of control on extra expenses.
Globally, not just in Malta, tourism will be the first impacted and the most felt.
In Malta, we have just agreed with the Maltese Government on a moratorium period on all the tourist-related investments in order to grant some protection to the sector.
Since part of real estate development is related to tourism development, we also found some cross-impact on real estate development.
As much as we are concerned as a bank, we don’t yet have a big enough exposure to these sectors for us to feel the affects immediately. But clearly, we are feeling some reflections from some of our present customers because they are more discerning on investment, they were pondering on.
Naturally the banking sector here in Malta feels very strong in these two sectors. Globally, there is less money circulating and people are much more protective on what they do.
Do you think that the economic recession will be a long one or a short one?
I believe that it has to be a short one, otherwise, something will have to be done in order to make it short. These problems cannot last forever.
As you know, everything depends on economic development, so we either have a market request to change the models and procedures, or a political one, but things will have to change.
After the latest ECB interest rate cut two weeks ago, Banif Bank was the only major Maltese bank that has partially reduced its base rate, while the other four major banks did not touch their base rate. What led Banif to go against the consensus of the other established Maltese banks in this decision? Is this one way of offering an alternative bank to Maltese customers? Why?
Firstly, I believe there was no consensus about that, because interest rates are part of a decision-making process of banks, independently.
Being a Maltese bank, Banif had to look at the Maltese market. We felt that reducing 30 basis points to the base rate (on home loans) was the right decision to make in this respect.
We cannot go against the market policy. If all the players were keeping their base rates unchanged, it would have been very difficult for us explain to depositors why we are paying a lower deposit rate when other banks were not.
So we tried to make an adjustment, keeping somehow the lead in mind, but also keeping the bank’s position and its responsibility towards the market.
We therefore reduced our interest rates on the home loans segment, a segment which we believe we have to invest in to give a better quality of life to Maltese families.
We adjusted it within an area with impact, where people could really feel the contraction on the rate, and at the same time also protecting our depositors in order to keep the bank completely competitive.
What more surprises does Banif Bank have in store for Maltese banking customers in the next few months?
Our plans are to invest a little more on the image of the bank, so that the bank can be fully understood.
We are very strongly approaching the market – we have our teams working on a daily basis approaching the market, approaching the clients, approaching the prospects in order to pass on our knowledge.
We have no problem to be considered as an option because we know that we are considered as an option.
But at the same time we still believe that the bank needs to grow. We will keep expanding our branch network.
We will be opening a new branch in Gozo today, while in Malta, four new branches are expected to be opening by June.
As I tell my senior management, “Banif will grow as much as it is allowed to grow”. We are not growing for the sake of growing; the signals must come from the market.
We are in fact opening in those areas where the market gives us clear signals.
Our initial business plan was pointing at 18 to 20 branches in the entire country. We will also have a few other business centres operating in the very near future.
Where do you see Banif Bank positioned in five years times in the Maltese market?
In terms of the branch network, we will be positioned as the third player. In the next five years we plan to be in a clear position where the bank is clearly understood as an option in retail.