Joint ventures entered into by Fimbank, the international trade finance bank headquartered in Malta, will be operational in Russia and India by the first quarter of next year.

Fimbank holds a 49 per cent stake in India Factoring, the Mumbai-based company which is to carry out factoring, forfeiting and trade finance activities. Other shareholders include the country's second largest public sector bank Punjab National Bank, Italian factoring leader Banca IFIS, and Blend Financial Services Ltd.

Factoring involves companies selling receivables to banks to create cash flow.

The venture has been a year in the offing and will see Fimbank re-enter the Indian market after it sold the Global Trade Finance operation it previously ran within the country last March.

Fimbank president Margrith Lütschg-Emmenegger is particularly pleased with the top notch partners which came on board for this venture.

"Given the crisis, it was much more difficult to get partners interested in new investments than it was two or three years ago - even in India - although as a market it has not suffered as much in the crisis," Ms Lütschg-Emmenegger told The Times Business in an interview.

"That the partners came in to give the venture substantial non-Indian ownership made us very happy because that is what we wanted. That has an impact on the strategies available going forward. We believe in the company not being run by one shareholder. It should be an independent company which is run by the management, so the business is done for the business and not driven by the shareholder. Our shareholding in other joint ventures is always around 40 per cent. We will probably sell down a little bit of our 49 per cent going forward. There is a possibility that one of the shareholders might increase their holding."

Fimbank will predominantly bring technical knowledge to the Indian venture, particularly product design, risk assessment, IT capabilities, and marketing strategies. The bank's previous experience in India will also be an important factor. India Factoring currently has four people on its initial team which is to grow to 20 in the immediate short-term. Ms Lütschg-Emmenegger, however, envisages the staff complement to grow to around 100 and the nationwide network to incorporate 40 offices.

"It is a labour-intensive business and India is a huge country," she pointed out. "But there is excellent quality of staff there. India reminds me of Malta very much. The workforce in the sector is very committed, very well educated. Our customers, on the other hand, will be the SMEs, the drivers of the economy, but the bigger players will also be targeted as they will find our services useful. Pharmaceuticals is a sector we could target."

Fimbank's Russia venture also falls within the bank's strategy to tap emerging markets. The world's largest country by size, Russia is risk-attached. Ms Lütschg-Emmenegger is confident Fimbank's partners will mitigate the risk.

FactorRus is a joint venture of Transcapital Bank of Moscow (partly owned by the European Bank for Reconstruction and Development), and IFC, a member of the World Bank Group.

FactorRus, in which Fimbank has a 40 per cent stake, aims to fill the gap created by a scarcity in bank financing for Russian companies with short-term funding against receivables. Ms Lütschg-Emmenegger explained a handful of companies in Russia were actively offering services similar to factoring - she argues it was lending secured - but one has gone into liquidation and opens up an extra slice of the market for a new entrant.

"Russia has come a long way and behaved very well in the crisis," Ms Lütschg-Emmenegger said. "The growth might be a little slower in Russia than in India, and we would rather be safe. There is credit insurance availability in India but it does not really exist in Russia as yet. There is a factoring association in India so self-governance is in place. In Russia, we will have to initiate it ourselves through this venture."

FactorRus's target client group will be the small- and medium- sized business sector but the institution could also take aim at the many large retail groups present there (Metro is one) and particularly their suppliers. FactorRus will slowly grow its Russian network to have a presence in 15 cities.

Fimbank, which is currently present within operations in Egypt, Lebanon, Dubai and Romania, besides Malta, is now examining the potential of the Brazilian and African markets. China, Ms Lütschg-Emmenegger adds, could be an interesting prospect when regulations eventually permit international entrants to that market.

In an interim directors' statement on Monday, the Fimbank Group said it "approached the third quarter of 2009 with liquidity and capital adequacy ratios at healthy levels amid a normalisation of market conditions and a slow return to confidence... Improved efficiency and cost management measures have helped to keep operating profits on target."

Business picked up in Dubai and Egypt and the trading performance of the London Forfaiting Company has lifted.

Ms Lütschg-Emmenegger explained that the market will see some tightness towards the end of the year as banks seek to preserve liquidity: "We too are preparing for that now. We also want to show a good liquid picture at the end of the year. That is what everybody does and this will affect the market."

The bank said efforts were also stepped up at resolving credit issues related to some financial assets, namely debt securities and other loan instruments for which unrealised mark-to-market writedowns have been in the books since the end of 2008.

Ms Lütschg-Emmenegger said Fimbank expected "some serious writebacks in 2010".

"We have been very successful in addressing some of the issues attached to the crisis. We have quite a clean balance sheet at the end of the year," she pointed out.

Meanwhile, Fimbank which is currently recruiting executives for senior positions, is to budget for an increase to its 135-odd staff complement. The bank hopes to move into the new premises for its headquarters at Pendergarden's The Exchange in St Julians soon after the development's completion in 2012.