Fimbank, the international trade finance bank headquartered in Malta, is working to set up a factoring joint venture in Vietnam and has completed a principal plan to establish a presence in Switzerland, president Margrith Lütschg-Emmenegger told The Times Business.

Yesterday the bank launched a €25 million bond issue, with a further over-allotment option of €10 million, denominated in euro and US dollar. The 2013 bonds will bear an annual interest rate of 4.25 per cent.

Ms Lütschg-Emmenegger explained the proceeds from the bond issue were intended to boost funding for Fimbank’s core business, particularly its growing structured commodity trade finance operations.

“This bond issue has a very different purpose to the 10-year issue we launched last year,” Ms Lütschg-Emmenegger added. “The purpose of that bond was to invest in equity in joint venture companies. This one aims to fund our core trade finance business. It has also been designed with the current market in mind. There is very little short-term paper on offer locally. The three-year term is attractive to investors: interest rates will rise at some point and bondholders will be able to invest again at new, possibly higher rates at maturity.”

Fimbank’s growth strategy in emerging markets continues relentlessly with its newest factoring project in Vietnam. Ms Lütschg-Emmenegger is to travel to the country next month where the bank sees good potential for its factoring business in a rather safe operational environment.

Fimbank plans Swiss presence

IFC, a member of the World Bank Group, is once again expected to join the Fimbank venture.

This latest foray into Asia follows the bank’s involvement in India Factoring, a Mumbai-based company in which Fimbank has a 49 per cent stake. Ms Lütschg-Emmenegger said the Indian company is expected to be granted a full factoring licence this month, rendering the business operational.

Meanwhile, a memorandum of understanding has been signed with partners in a planned Brazilian factoring joint venture, while a MoU over a similar operation in Kenya is expected to be signed next month. FactorRus, Fimbank’s joint venture in Russia, has recently become operative.

In all these markets, including the more developed countries, Fimbank will seek to win business from the strongest factorable sectors which have low value repeat business, including manufacturers of furniture, tools, and car spare parts, industries like pharmaceuticals and textiles, as well as commodities such as coffee, tea and spices.

Ms Lütschg-Emmenegger explained there was a diversified range of sectors available to Fimbank which interfaced with each other. With operations present in strategic regions, the bank was able to run its offering across the trade flows, even from seed to store, allowing it to offer full supply chain finance.

Now, with all the foundations laid in the targeted markets, Fimbank has set its sights on establishing the brand on the elite trade finance circuit in Switzerland. An application is planned to be filed with the Swiss regulators in the short term.

“Switzerland is a huge centre for trade commodity finance, particularly the French-speaking region around Geneva,” Ms Lütschg-Emmenegger pointed out. “It is a strong base for trading companies which are Swiss-owned and non-Swiss owned. It is a considerable market for us to tap into. Besides, a presence in Switzerland will give us access to specialist expertise in this sector which to date has been difficult to find in Malta. Needless to say, a Swiss banking licence would add value to our group.”

Fimbank’s longer term ambitions in private banking would also be boosted with a Swiss presence and Swiss licensing.

Ms Lütschg-Emmenegger said the time and the global economic scenario was right for Fimbank to grasp opportunities. After working its way through the international banking crisis, and securing the desired positioning, Fimbank was seeking a return to its performance levels of pre-2008. The bank’s outlook for 2011 was “very optimistic” on the back of a satisfactory first half of 2010; the group recorded an interim post-tax profit of $3.39 million for the first six months of 2010, up from $2.92 million in the same period in 2009.

“The world situation is impro­ving,” the president continued. “There are small steps in the right directions and an uptrend in the stock markets. Trade is also picking up: the WTO is forecasting an increase in 2010 of net 13.5 per cent. The first half was 25 per cent, so there is a heavy rebound. We are particularly poised to benefit from the current situation because many of the larger organisations have some problems to address so there are opportunities for us.”

Fimbank will, in turn, seek to offer investors opportunities by tapping the Maltese capital market regularly, possibly with different instruments, as it works to improve its funding further.

Meanwhile, the 150-strong team is looking forward to moving to its new headquarters at The Exchange in St Julians from its Sliema base in some 19 months’ time.

Ms Lütschg-Emmenegger said the dedicated block will not only complement Fimbank’s growing international image but will also be evidence to Maltese investors that the bank was in Malta to stay and expand.

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