It is exactly 10 years since HSBC took over Mid-Med Bank, a decade which HSBC Bank Malta plc chief executive officer Alan Richards says the bank looks back on with pride.
Europe's largest bank has celebrated 10 fruitful years in Malta internally and discreetly by planting 1,400 trees at Magħtab, one for every staff member.
A milestone anniversary in Maltese banking history may have gone largely unnoticed by the local business community, but chief executive officer Alan Richards says it is not house style to hold lavish celebrations on such occasions. The anniversary was toasted at the Christmas staff party on Monday.
Not that HSBC is minimising its Malta story. Asked how he looked back on the bank's residence here, Mr Richards replied: "With pride, actually. Malta is an important market for HSBC and the last 10 years have been an unqualified success story.
"From a customers' point of view, we have brought new products, new services, new technology to the market, and we have certainly seen an increase in competition, which is good for everybody. From a shareholders' point of view, the financials stand for themselves. From an employee point of view, we have brought new working practices and created opportunities for people to work elsewhere in the bank internationally.
"For the government, we have invested heavily in the local economy: we are a major taxpayer and we have done our bit to ensure that during the most severe economic crisis in living memory the Maltese financial markets have been relatively stable.
"At heart, we are a community bank and we have worked hard to put something back into the community through our various foundations which focus on environment, children and heritage."
The anniversary fell towards the end of an enormously challenging year, but domestically HSBC, Malta's largest listed company, has continued to invest in the economy over the past months. In 2009, the bank extended over €700 million in household and corporate lending, and there has also been active interest in the €100 million SME fund launched a year ago to ease cash flow pressures.
HSBC Malta's strong capitalisation and liquidity ensured it was open for business and able to be supportive in testing times, Mr Richards pointed out. The bank restructured corporate and household lending for individual clients when it was necessary to do so and capital repayments moratoria have been applied in both sectors.
"It is important to understand that lending policies don't change with the wind," Mr Richards explained when asked whether changes were planned for lending policies. "We set our lending policies for the worst of times, not the best of times. We have seen very little change to the overall lending policy within the bank in Malta."
Over the years, HSBC has consolidated its sizeable domestic business, and Mr Richards pointed out its competitive advantage lay in service excellence and standard setting in service delivery.
"That is something we work incredibly hard at," Mr Richards said. "We do not always get it right but we put a lot of time, energy and effort into it."
As an international player, Mr Richards added there were areas that the bank had a natural right to win like trade finance, payments custody, fund management and international-related business to private or corporate clients. With 8,500 branches and offices in 86 countries, HSBC's "extraordinary reach" allowed it to play a significant role in attracting foreign investment, a responsibility, he said, that the bank takes very seriously.
Domestically, customer interaction is constantly evolving. Ten years ago, there was no internet platform to speak of. Today, Mr Richards pointed out, the vast majority of customers preferred to deal with the bank online. HSBC has openly encouraged the use of automated banking channels but there is also a rolling programme of branch upgrades in place.
"The whole way we work with customers is continuously evolving, so branches are a very important part of that, but we are also continuing to invest in self-service machines, call centre, internet technology and so on," Mr Richards explained. "We continuously adapt that mix where customers' needs and preferences lie. Customers are telling us that they prefer to visit branches for the more complex, face-to-face discussions, whereas increasingly they are using automated capability to complete routine transactions."
Asked whether the bank intended to charge for ATM use eventually, the chief executive officer replied: "We need to encourage customers to use automated channels, so I think pricing will play its part, but there is no transaction to charge muted at this point."
HSBC is Malta's second largest employer with a headcount standing at 1,900 (including the 500-member team at the Swatar call centre). The number is not likely to change significantly in the immediate future. Over 70 employees opted for voluntary early retirement in the last scheme launched in December; the moves were implemented in the first half of this year.
Ten Maltese members of staff have been cross-posted overseas this year as part of the bank's programme of secondments which employees are actively encouraged to participate in. All international jobs are advertised on the group's intranet.
"Our best and brightest people are managed within a talent pool concept," Mr Richards, who has worked across Europe and Asia, explained. "Obtaining international experience is an important development step for them. In truth, one of the biggest hurdles we face is that the quality of life in Malta is so good that it is difficult to encourage some of these individuals to take up cross-postings. At the end of the day, we have some very talented people in Malta - there is no question about it. The Malta head of personal financial services' secondment to run the retail operation in Japan is testimony to that.
"There is no doubt that staff develop much broader experience from a cross-posting. It is often good for different parts of the group because we take best practice from Malta to other parts of the group's operations. Ultimately, it is good for individuals. They come back richer and wiser from the whole experience."
HSBC Malta's management team, he insisted, featured a healthy mix of expatriates and Maltese. The bank, where 99 per cent of staff is Maltese, is a meritocracy.
"We take succession planning and people development seriously, and we all have to go through assessment centres. We are certainly working hard to develop local talent for the group's benefit and trying to improve local succession planning.
"When people return from secondments they are able to compete for the most senior positions in the internal job market but frankly also elsewhere in the group."
Mr Richards described the call centre which services the UK operation as a great success that was used as a role model by other players considering moving similar operations to Malta. HSBC would consider relocating other satellite operations to the island, given the advantages the jurisdiction offered.
"We are certainly doing our part to look at opportunities to create more jobs in Malta," the chief executive pointed out.
"Malta is particularly suited to middle office type work and its strengths lie in the quality of its people, education and language skills. We have found that the trade-off between cost and quality is very good here, but Malta must remain competitive in international terms."
Asked about the bank's contribution to the local pension reform process, Mr Richards said there are two reasons for looking at the development of pensions.
"Malta needs a healthy domestic pensions market if it is to establish itself as a fund management centre on the world stage.
"The aging population is a ticking time bomb in welfare terms," he explained.
"The government is aware of it and it is certainly working on it. We are part of that consultative process. We need to encourage savings and encourage people to save.
"The sooner that happens through structured pension schemes the better for everyone's perspective."
Mr Richards, who took up his Malta post in April last year after a term as deputy chief executive of HSBC Bank Australia, cautioned that the events in Dubai earlier this month were a timely reminder of how serious the economic crisis has been. The chief executive continues to emphasise that "we are not out of the woods yet".
"Markets are stabilising but there are some serious economic challenges still to be faced in the developed world, and we are in unchartered territory, so it is very difficult to crystal-ball gaze," Mr Richards pointed out. "There is still a long way to go with the recession and there are plenty of challenges, but Malta is relatively well placed, certainly compared to the rest of Europe where probably only Poland and Cyprus are faring better out of the Euro 27. We are confident that we are in a good position to pull through the current challenges."
In Malta, he adds, HSBC has performed very well over the last 18 months despite the recessionary effects, but the bank's profitability will pick up as markets stabilised and the economy healed.
At group level, Mr Richards, who joined HSBC in 1984, says the bank has fared remarkably well in the crisis. Again this week group chairman Stephen Green, a devout Anglican, advocated that markets and morals can mix after famously saying a few months back that banks owed the world an apology.
"I don't think all banks owe the world an apology," Mr Richards smiled. "I think there are lessons to have been learned. The reasons behind the economic crisis are complex. HSBC has fared remarkably well during a very challenging period, but there is a lot of criticism of the industry and much of it is justified."
Speaking about the group's bonus policy, Mr Richards explained HSBC had a strong independent governance structure: "At all levels we have independent remuneration committees which are more often than not staffed with non-executive directors, so there are checks and balances in place. Part of HSBC's culture is a very strong commitment to ethics, and integrity plays an important part in what we do. The group chairman leads by example and is a standard bearer in that regard. We have managed to avoid the worst excesses of that short-term bonus culture at HSBC."
HSBC's 10 years
June 2, 1999: HSBC acquires Mid-Med Bank
December 1, 1999: 'N-day': HSBC name goes up
October 2003: HSBC Premier launches in Malta
November 20, 2006: Swatar call centre opens
January 29, 2008: Gozo service centre opens
February 15, 2008: Second phase of call centre opens
Chief Executive Officers
1999 - 2002: Tom Robson
2002 - 2004: Chris Hothersall
2004 - 2008: Shaun Wallis
2008: Alan Richards