Analysis of bank statistics

I am grateful to the president of the Fimbank Group (June 14) for having given me the opportunity to clarify an important point which, due to space restrictions, I was unable to explain in my article Banking Statistics at a Glance (June 7).

I opted to include in the table accompanying my article “bank” as against “group” statistics for various reasons and, primarily, because a depositor entrusts his/her money to the bank and not to the group.

Of course, this applies equally to all banks/financial institutions and not just to Fimbank.

The fact that my approach was queried only by Fimbank seems to be because out of the three smaller banks included in my review (the other three being long-established in Malta) the 2011 financial statements of that bank showed a difference of 4.5 per cent between the balance sheet footings (12 per cent in the case of total equity) of the group and the bank.

In simple language, the figures for the former showed a healthier situation than those for the latter.

I emphasise that my article was not written for the benefit of financial analysts (who, obviously, are capable of arriving at their own conclusions) but was an attempt to provide bank depositors with some salient figures at a glance.

There was space for an analysis of only six banks initially. An analysis of the figures of more locally licensed banks/financial institutions may well be featured in another article in due course.

Without going into too many technicalities and legalities, the cardinal principle which prompted my decision to stick to “bank” as against “group” statistics is that a depositor’s debtor/creditor relationship is with the former and not with the latter. This is an undeniable fact.

Even Fimbank’s website (as also is the case in advertisements) confirms this by referring in various instances to “the bank”.

Indeed, in the information on the depositor compensation scheme it is specifically stated that “...in case a bank participating in the scheme is unable to meet its obligations towards depositors...”.

It is to be mentioned also that their website lists the various member companies comprising the Fimbank Group.

Apart from the bank, the two other (comparatively much smaller companies) registered in Malta relate to business solutions (rendered primarily to the bank itself) and to property management (of its own leased premises). The other two are involved in forfaiting and factoring (services with which local depositors are unlikely to be familiar) and these are both registered abroad.

In conclusion, I see no good reason for complying with the Fimbank’s president’s suggestion that I undertake a similar exercise based on group rather than bank figures. Were I to do so I could well be accused by depositors of giving information that could well be perceived by them as being misleading.