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APS Bank embarks on ethical international finance dimension

APS Bank chairman Lino Delia: "APS can operate successfully at home and overseas through the European Federation of Ethical and Alternative Banks." Photo: Matthew Mirabelli

APS Bank chairman Lino Delia: "APS can operate successfully at home and overseas through the European Federation of Ethical and Alternative Banks." Photo: Matthew Mirabelli

APS Bank has embarked on a three-year business plan that will see it increasingly involved in international alternative finance initiatives through the European Federation of Ethical and Alternative Banks (Febea).

Through APS Consult, the advisory arm it established in 2006 to spearhead the acceleration of restructuring of traditional economic sectors and care services, the Church bank has carved an important role for itself within the network of small church and co-operative banks.

Chairman Lino Delia, at the helm for 11 years, told The Sunday Times that APS Bank has identified an efficient route through which it can maximise its potential to fulfil its Catholic mandate thanks to its membership of Febea.

As a small bank operating in the Eurozone, Prof. Delia explained that the bank is now able to help people safeguard their future beyond the Malta and Gozo dioceses, in areas like eastern Europe, Africa and Latin America.

Additionally, through its increased access to international expertise of change management, APS is able to adapt policies to sensitive sectors in Malta, including agriculture and the elderly.

Brussels-based Febea is a non-profit organisation incorporated under Belgian law in 2001 by Crédit Coopératif of France, Caisse Solidaire du Nord Pas-de-Calais of France, Crédal and Hefboom of Belgium, Banca Etica of Italy, and TISE of Poland.

As at last June, the association's 25 members, including 11 banks, six savings and loan cooperatives, five investment companies and three foundations, accounted for a balance sheet of €21 billion, with some 528,000 clients and shareholders between them. Despite their varied set-ups, all Febea members share the same concern for transparency, and social and environmental efficacy.

Febea's primary role is to create financial tools to help existing European initiatives and encourage the growth of new ones through alternative finance.

In April, APS will host Febea's annual general meeting in Malta which is expected to focus on micro-finance in Europe.

APS Bank, which celebrates its centenary this year, was originally established as a savings bank by a Jesuit, Michael Vella, and modelled on institutions based in Lyon and small Italian cities. The bank was granted a commercial licence in 1990. Soon after his appointment to lead the bank, Prof. Delia immediately set about reorganising the institution as an instrument of change, particularly as its savings model had been superseded by the welfare state.

The Malta and Gozo dioceses - the shareholders - subscribed to the bank's plans and agreed to a Lm4 million (€9.3 million) capital injection, raising the bank's capital to Lm6 million (€13.9 million). APS embarked on charting its future.

"If the Church wanted to keep the bank, it had to be remodelled to do something more and to complement what the other financial institutions were doing," Prof. Delia explained.

Following the agreement with the Holy See, land previously owned by the Church began to be jointly administered with the government. APS successfully branched out into the home loans market, instigating other local banks to re-evaluate their own products. Two years ago, it established APS Funds Sicav plc, to develop ethical funds. The bank has striven to marry the Maltese's coupon consciousness with ethical investment.

But behind the commercial scenes, APS had been working with the agriculture sector, and as EU membership loomed, the bank became more involved in educating farmers on the challenges they were about to face.

But teaching alone was not enough. The co-operatives lacked the spirit of sustainability, particularly as the sector survives on subsidies that are to be phased out in the next few years.

APS Consult acquired a farming advisory agency licence in a bid to focus on raising and channelling resources to safeguard the sector's future. Expertise was roped in from Denmark, the UK, and Malta.

APS Consult, now run by a team of four, also turned its attention to welfare, mindful of the difficulties being faced in European institutions operating in the welfare sector. Prof. Delia was concerned that a worrying trend could have serious repercussions in Malta when and if it hits locally.

Through Febea, APS Consult is working to draw up a European policy on financing residential and care homes as governments struggle to cope with demographic changes. Over the past year, several meetings have been held with a view to presenting the Febea strategy, including the case for Malta, to the European Parliament and the Commission, supported by Caritas Europe.

Concurrently, APS Consult is collaborating with the German government on a development aid project for the elderly in eastern Europe and Africa.

In the meantime, APS is providing capital to a Febea project, Coop Est, to set up ethical financial institutions in Albania, Romania and Bulgaria. It is even investing directly in ethical microfinance institutions in Denmark and Norway through the federation.

Prof. Delia has a full diary this year as he balances commitments to APS's widening domestic and international dimensions.

Now that the 100-odd members of staff have completed their translocation to the new Swatar headquarters, the seven-storey block in the fledgling business district is scheduled to be officially inaugurated in October.

APS's annual seminar in March is likely to focus on climate change, and the traditional yearly concert will be held in October.

APS plans to expand its network over the next three years. It currently has seven branches and agencies nationwide, bringing its total staff headcount to just under 200.

Prof. Delia said APS Bank's domestic customers continue to increase. Locally, its strategy will be to increasingly give clients value added. Developing custom on its loan and deposit book is only constrained by the Church's - and the bank's - reluctance to lend long- term in the clients' interest, even at the risk of losing customers.

But the chairman has long been converted to APS's international vocation.

"APS can operate successfully at home, and overseas through Febea," he explained. "This is the strategy to build our network. This vision has been vindicated after what happened over the past 24 months internationally. The big banks operate in a realm of their own. The small banks cannot perform effectively outside a network, hence the need to develop another social network with clearly specified objectives within the Eurozone.

"Febea is working specifically to build a second network of financial institutions across countries which saw considerable turmoil, such as in Spain. The banking world still needs the small banks to stimulate savings, for example, and to channel them to identified niche markets."

Further ahead, Prof. Delia believes APS could even consider offering products in Europe through Febea, particularly lending for social causes, which could involve deriving deposits from abroad on a limited scale.

"We do not need to open branches," Prof. Delia said. "We only need to co-operate with the Febea members. We can participate in new ideas even by bringing our own resources to the table in our small way. Our interest is simply to reach more people. It is possible if all play their part, however small."

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