Banif Bank: On track to become a major player

With eight branches operational nationwide – two of which were inaugurated days apart in September – Banif Bank (Malta) plc is on track to implementing its original business plan, chief executive officer Joaquim Silva Pinto told The Times Business.

Mr Silva Pinto said that by the end of its first five years in Malta, Banif Bank hopes to be listed on the Malta Stock Exchange and evolve into a fully-fledged market player.

Banif Bank (Malta) plc, a Maltese bank owned by Portugal’s Banif Financial Group and local investors who hold a 28 per cent stake, came to the islands 21 months ago determined to establish itself as an alternative banking option in a market dominated by two major players. Last year, the group declared that the Maltese operation intended to hold a market share of between 10 and 20 per cent, and open 22 agencies in the next four to five years.

Banif Financial Group was established in 1988 following the takeover of the 100-year-old Caixa Economica do Funchal. Banif Group has expanded its operations into diverse sectors in financial services through a series of mergers and acquisitions at home and abroad. With total assets of €10 billion, the group incorporates over 50 companies employing over 5,000 people in 500 branches in 15 countries.

Banif Bank (Malta) plc was incorporated in March 2007, as a fully owned subsidiary of Banif SGPS SA with an authorised and issued share capital totalling €45 million. In its first year of operation, the bank registered a loss after tax of €3.156 million. Total assets amounted to €34.306 million.

“We are positively surprised with the results we have obtained so far,” Mr Silva Pinto said of the bank’s first months in Malta, citing the adverse international conditions hovering over the birth of a new financial institution. He said Banif had decided from the outset that it would forge ahead with the new venture despite the clouds and stick to the original business plan. Banks, he said, are not designed for the short-term.

“Some things are going a little slower than expected,” Mr Silva Pinto conceded. “Other things are going faster. We are basically on track with our programme as much as targets which depend only on the bank are concerned.

“As far as the bank business area is concerned, we are a little bit delayed on the initial programme, but that is not only a problem with Banif Bank. The entire financial system is feeling some difficulty, and the market is a little bit retracted from investment and new operations.

“In retail, we will be achieving the figures we were expecting. Business and corporate is the area where we feel there is some more delay – not on the contacts, the dossiers, or the portfolios, but on the finalisation of the processes, which is natural in the present situation.”

Mr Silva Pinto explained that the group had identified an opportunity in Malta for the entry of a new player that would offer alternative options. Raising the Banif flag in Malta would also provide the bank with a strategic platform to other parts of the world.

The bank will shortly be able to offer investment products once licensing procedures are finalised but Mr Silva Pinto said the immediate priorities were the establishment of a solid retail network and acceptance by the local banking population. Investment banking was an opportunity to add value to the bank’s offering. As other things will be.

“The bank will always be attentive to market requests,” Mr Silva Pinto added. “As much as we feel that we can make ourselves available to the local market in sectors where the bank can add value to the market and become another option, we will naturally give our clients what they expect from us: the best offer or an alternative to choose and compare.”

The chief executive said Banif was able to implement such rapid retail presence on the islands because its retail concept was considerably different. Banif’s retail model is focused on service quality delivered by a small team of four or five able to deliver solutions from the product basket in relatively shorter time frames. The team is sustained by a much wider back office support structure.

“Like this, it is much cheaper to support a branch,” Mr Silva Pinto pointed out. “It is not an issue for the bank and, at the same time, we can go faster and further with our market presence. Basically, like this it is easier for us to be present in more places – that is why we already have eight branches that are fully operational and we still have many more to come. We will be where we are expected to be.” Mr Silva Pinto said the bank was also keen to identify locations where other local banks were not present like up-and-coming residential or commercial areas. The major preoccupation was finding the right premises in the right location. Setting up a branch was fairly straightforward after that.

Asked how the bank won its first crucial customers in Malta, Mr Silva Pinto replied that he was not sure whether the bank won those customers over or whether the customers had decided to test the bank and approved of its way of doing business.

“Banif Bank has changed the market a little bit,” he said. “We have tried to give the market an opportunity to try something different. Although we have two main competitors, I do not know to what extent the market sees them as different banks. We are trying to be different in our behaviour as a bank but also trying to be different on our model of approach to the client.

“We carried out an intensive marketing campaign, with a strategic approach, but you still depend very much on winning the market’s trust. A new bank coming to Malta needed very much to be trusted by the market and that was our biggest preoccupation from the outset. We have no doubt that the brand is accepted now and that it is assumed to be a player. Now it is our responsibility to prove ourselves. The customers are giving us the go- ahead, we are seeing it as the figures are growing every day.”

Banif is not unduly concerned about the impact low interest rates are having on its books. Mr Silva Pinto emphasised that the bank was still in its investment phase in Malta, a long-term investment that was “very secure”. The bank’s immediate concern was establishing its market presence which would return a profit thanks to the increase in its portfolio and the implementation of its products. Mr Silva Pinto admits that the volume of business had been impacted but that was not Banif’s problem alone.

Behind the scenes, Banif’s team has been working on designing products for clients in particular brackets. Financial packages have been drawn up for professionals after focus group feedback helped identify solutions in high demand. A similar exercise has been carried out among students and other customer groups. Mr Silva Pinto pointed out that Banif had the capacity – and the time – to find specific solutions for specific clients, even if it meant sharing customers with third parties, which he said, was a good principle to have.

The chief executive added that loans had proven particularly popular among clients given some differentiating aspects of availability. Innovative deposit accounts like the High Saver product and the New Generation product had seen considerable take-up. The Flexiterm deposit offering had been welcomed by both retail and business and corporate clients as it allowed some cash movement without loss of interest.

Banif Bank (Malta) currently has exactly 100 staff members on its books – including three Portuguese. Mr Silva Pinto is quick to underline that the bank’s achievements in Malta to date were mostly to the Maltese team’s credit.

“They have assumed the project very well, they bought it and now they are clearly responding,” Mr Silva Pinto said of the bank’s Maltese staff, who should be increased to 120 in the short-term. “Even the heads of department are Maltese. This is clearly a certificate of quality for them. We had no doubts when we began to look at this project. Some skills are not so easy to find, mostly skills that are connected to new technology and new realities. We invest in young people, graduates who we believe are more open to new opportunities and new solutions, but we cannot establish a bank without expertise and without experience.”

Asked where Banif Bank (Malta) plc saw itself in three years’ time, Mr Silva Pinto was unequivocal: “That will be five years of operation in Malta. We would like to be a quoted institution on the stock exchange and we would be a reference in the local market as an option in the financial sector.”

Mr Silva Pinto explained that after the investment phase, the bank would move into consolidation mode through to the fifth year of operation. By then, Banif should be “one of the most solid institutions in Malta”.

“By that time Banif needs to be certified in some sectors, like quality certifications and other validations that are nowadays imposed so that the final customer is protected. For the time being, we have a big group supporting that. But as an institution in Malta – and as a Maltese bank – we also need to have that proof clearly manifested. By being accepted for stock exchange qualification and moderation means that that acknowledgement has been granted. It is important for us as an objective to be there. After that, the local population will have the options, the offers on our shares, and will be able to approach the bank every time it decides to increase its presence.”