The recently announced investment by Qatar’s Al Faisal Holdings in Banif Bank cannot but be welcomed if only because it seems clear that no European bank was interested in purchasing Banif Portugal group’s 78.46 per cent shareholding for which the Portuguese have been desperately seeking a buyer. This in view of the Portuguese government’s condition, when bailing out the Portuguese bank some three years ago, that all its foreign investments be sold, the deadline for the Malta bank being 2017.

This, of course, has no immediate impact from the point of view of foreign investment in Malta as the share sale represented merely a transfer of funds from Qatar to Portugal. However, Al Faisal have declared an interest in expanding Banif Malta’s operations and an intention to invest in other sectors in Malta. Thus some real FDI from the Qataris can be expected to be made.

Al Faisal is a leading private investment company that has worldwide investments, thus this augurs well for Malta. It is worth mentioning that Qatar’s per capita GDP is more than six times Malta’s.

The sale consideration of the 78.46 per cent holding has not been disclosed although, about one year ago, a figure of €18.4 million was being touted.

Banif Malta’s last published audited accounts (December 31, 2015) showed a paid-up capital of €32.5 million with accumulated losses of €10 million resulting in a net asset (book) value of €25.4 million after taking into account revaluation and other (non-distributable) reserves.

Thus it could well be that the bank was sold at much less than net asset value.

Banif first made a profit in 2012, marginally reducing accumulated losses to €11 million. Up to 2015, this figure reduced to €10 million. Thus Banif has a long way to go to clear accumulated losses.  Indeed, in the nine years since, the bank’s inception shareholders have not been paid any dividends.

It will be recalled that in 2001 the bank was constrained by the regulatory authorities to spike up its paid-up capital by €7.5 million, from the original figure of €25 million, because accumulated losses had reached €11.2 million by then. The local shareholders put up their 21.54 per cent share of the increase in paid-up capital thus maintaining the same percentage holdings.  Press reports have quoted the CEO of the holding company’s investment arm assaying that Al Faisal intends to provide the resources, including capital, for the bank to grow. Al Faisal should have no problem in pumping in more funds so as to improve the bank’s capital base. It remains to be seen, in that case, if the local shareholders are ready to maintain their percentage shareholding or to allow a dilution.

The arrival of the Qataris on the local banking scene cannot but be viewed as very welcome and timely.

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