New chairman aims to make BOV more customer-centric

[attach id="251284" size="medium"]Chairman John Cassar White said shareholders need to look at the long term and must understand that the banking industry is changing. Photo: Darrin Zammit Lupi[/attach]

Just three weeks in the chairman’s chair, and John Cassar White has clear intents and purposes, particularly on how his tenure at the helm of Bank of Valletta will be defined.

Trust, he says, is a fragile asset, and his key objective is to see it preserved to the best of the entire team’s abilities, within a culture of duty of care towards customers.

“In the past few years banking in Europe has taken a wrong strategic turn and bankers looked upon themselves as salespeople,” Mr Cassar White told Times of Malta.

“The culture affected the industry. We need to put the banker-customer relationship and the duty of care that we have towards the customer at the centre of what we do.

“People trust banks because many people do not understand finance and they can tolerate different levels of risk. I hope that when I come to leave the bank, this notion is ingrained in people. I would have achieved an important milestone.”

CEO Charles Borg is to head a new unit set up to review processes, service levels and delivery

Mr Cassar White insisted this reinforced culture will be visible to customers. Some customers, he added, may have felt that bankers were there to sell products as they sought to reach targets.

“All our officials, starting from myself, must be held accountable. We will strengthen our management, invest more in training. We will only tolerate genuine mistakes,” he insisted.

The new leadership follows a little publicised rebranding exercise by the bank which recently rolled out a crisp corporate image across its network and channels. Mr Cassar White emphasised that while rebranding was important it should be preceded by genuine actions for the back to be customer-centric.

Chief executive officer Charles Borg is to head a new unit set up to review processes, service levels, and delivery.

“One of my ambitions and objectives as chairman is to examine our processes, the way we work, and ask whether we are delivering the right quality of services that we verbally promise,” Mr Cassar White said. “This is an organisational issue – even the back office processes which affect the client-facing teams will come under scrutiny. Wealth management will be one of the first areas to be scrutinised.”

Mr Cassar White was named to chair the BOV board by the new Labour administration – the Government has the right to name the chairman alongside its 23 per cent stake in the bank. He said he was not tasked with reaching any specific objectives at Bank of Valletta, other than to continue to be supportive of Maltese enterprise, particularly key sectors like maritime and financial services which have enjoyed the consensus of both sides of the House.

“The underlying message of my appointment was that the bank should continue to be a protagonist in support of the local economy,” he explained. “We are the only large local bank with local roots and that makes us more responsible to support local businesses than ever before. That is the only brief I have.”

BOV issued a company announcement on the Stock Exchange a few days after Mr Cassar White’s appointment was leaked by the media in a sequence of events which initially raised eyebrows. Mr Cassar White insisted there was no spite or disrespect involved.

The new administration had only been in place for a few days and was most likely unfamiliar with the formal procedure, he offered. The Malta Financial Services Authority was already in possession of his directorship clearance as he has previously been a member of other boards. A new director’s questionnaire was duly submitted and approved.

A financial analyst and Times of Malta columnist, Mr Cassar White enjoyed a 36-year career at BOV and was involved in a range of business units, from administration to risk. He was executive chairman of the Malta Shipyards before it was closed down in 2008, and over the past five years he has taught management at the MCAST’s Institute of Business and Commerce.

At the helm of BOV, one of his first public tasks was leading the presentation of the interim results to March 31, 2013, last week. BOV registered record half-yearly pre-tax profits of €64.6 million, an increase of 32 per cent over the comparable period in 2011. Reaction from some quarters was particularly negative but Mr Cassar White acknowledged that there is a general antipathy towards banks across the world. Shareholders, he said, had to understand the realities of a changing banking industry.

“Shareholders have an interest – if we place more money in our reserves, there is less cash for dividends,” he conceded.

“We need to strike a balance between dividends and building reserves. The shareholders must look at the long term and must understand that the banking industry is changing. Regulations will become tougher, whether we like it or not. It is the cycle the industry is going through. We cannot influence interest rates, but we hope people do not take undue risks to achieve high yields.”

BOV’s provisioning policy, meanwhile, will be strengthened as mandated by local and international regulators and authorities, and the rating agencies.

New supervisory structures led by the European Central Bank will impose tough standards. BOV is expecting higher charges on its profits to contribute to the deposit guarantee scheme. The bank argues that this contribution should be risk-weighted as it would in insurance activity, and is involved in talks with the Central Bank over the matter. The scheme must be efficient without affecting the bank’s profitability, Mr Cassar White insisted.

He added that the bank had not seen any movements which suggested local depositors were concerned in the wake of the “Cyprus solution” which involved depositors in the bail-in. He observed how the situation in Cyprus could have been dealt with in a “neater” fashion and hoped it would never be applied again.

Penalising depositors could undermine confidence in the banking system, he warned, and that is the last thing the eurozone needed. While BOV was not affected, sentiment builds gradually and any issue which chipped away at confidence in the banks, should be nipped in the bud, he said.