When, in 2013, the European Commission approved a restructuring plan linked to the bailout of the Banif Financial Group by the Portuguese government, a condition was “the disposal of the control participation in (among others) Banif Bank (Malta)”.
The results of the group that were published recently and which were posted on the Portuguese website referred to the decision of the closure of the Maltese and other overseas subsidiaries of Banif and remarked that “in this context these operations are now classified as discontinued”.
The phrase “discontinued operations” caused a measure of concern among some of the bank’s clients. And, yet, no voluntary public announcement was made by Banif Bank (Malta) plc about the implications of the decision by the parent company to divest of its majority shareholding in the local bank.
While rumours about the future of Banif Bank in Malta were spreading in the financial services grapevine, few of the bank’s customers must have been aware of how these decisions taken in Lisbon and Brussels were going to affect them.
When Times of Malta carried a story on Banif’s plans to sell its 70 per cent shareholding in the Malta subsidiary, customers and operators in the local financial market started to ask questions. The delay in the publication of the 2013 results of Banif Bank (Malta) did no help to allay the concerns of some clients.
The communications failure was aggravated when a spokesman of the Malta Financial Services Authority stated that “selling a majority stake, as was happening at Banif plc was a very normal process in the banking sector and should not be of concern to depositors”. Many market watchers were surprised by this statement by the regulator.
Banks thrive on trust and anything that dents this needs to be taken very seriously. The lack of timely communication by Banif Bank (Malta) on its parent company’s intention to divest its majority shareholding here could and should have been avoided.
What is “very normal” practice is that when a bank is up for sale and rumours start spreading in the market about such a sale it is imperative that the institution concerned or its parent company makes a public announcement.
The fact that Banif Bank (Malta) is still operating well and expanding its business by opening new agencies confirms that a timelier public announcement would have benefited the bank’s image with its customers.
The regulator stated the obvious when it said that “we will only allow the sale to go ahead if the new shareholder is acceptable to us 100 per cent”. Of course, this is what one expects from a financial services regulator.
One hopes that the new majority shareholder of Banif Bank (Malta) will be a reputable financial institution that can add value to the bank’s operations here. This has to be said because it is not uncommon for non-strategic investors to consider the purchase of a bank for short-term gains.
While some observers may consider that Malta is already over-banked, customers will always welcome the increase in competition in the local market. As in other commercial activities in a small economy, the benefits of a free market may not be accruing as much as they should to bank clients.
Banif Bank, whether under its present form or in a re-branded edition, can have a very important role to play in the banking market in this country but it needs to communicate in a clearer way with its stakeholders.