FIMBANK

A Global Force in
Trade Finance

News Details

The Malta Business Weekly interviews FIMBank President

25.07.2014

1) Will you give The Malta Business Weekly a brief overview of FIMBank and its operations?
In a nutshell, FIMBank is an international trade finance specialist, and has been since its inception twenty years ago. We started out as a simple set-up tucked away in a discreet office in Sliema; a boutique bank offering a comprehensive range of trade finance and banking services with a strong focus in the emerging markets. Today, FIMBank is still headquartered in Malta, but in a prominent, state-of-the-art building in St Julian’s. We are also present in five continents. The Bank opened a Representative Office in London in its early years and in 2003 we acquired London Forfaiting Company Ltd, a leading global provider of forfaiting services.  Since then, the Bank has diversified its international trade finance activities and now has a physical presence in more than ten financial centres worldwide, doing business with partners, associates and corporate clients located in over 50 countries globally. We  plan to  continue  building the FIMBank brand name and benefit from the momentum acquired by selectively expanding our international footprint.

2) For those not familiar with the terms, would you explain what are “factoring” and “forfaiting”?
Forfaiting is the discounting of trade receivables on a without-recourse basis. It is a highly effective finance tool which allows an exporter or seller to grant attractive credit terms to his buyers without tying up cash flow or assuming the potential risks of late payment or default. Factoring is a flexible and affordable financial solution for small, mid-sized companies operating in a wide cross-section of industries, with immediate financing secured by their quality account receivables. One needs to keep in mind that for many companies, their sales invoices are the largest asset in their balance sheet. Many businesses understand that the conversion of invoices into cash takes place at a slow rate, sometimes representing more than three months’ worth of sales. Factoring enables the business to generate the cash flow to support growth, and unlike traditional bank loans, factoring does not require owners to risk their home or place other property as collateral. It is also a big time saver. It saves the business the time and effort that is otherwise required to collect from customers. That energy can be directed to more useful business-building endeavours like client development.

3) What are the key trends in trade finance at the moment? Is the global recovery impacting your performance?
Trade Finance has historically outperformed GTP growth and therefore we see a positive outlook given the improvements, albeit graduate, in the global economy. In the coming years, we expect a more substantial growth in trade from the emerging markets, while  so-called “South-South” trade is expected to grow even faster, a trend which has been evident over the last few years. With regard to the Bank’s performance, we have been seeing positive operating results in the main component entities, with slightly improved revenue levels when compared with the same period last year, both in terms of interest spread and fee income. Impairments are, however, impacting performance in Russia, while the outlook for Egypt remains cautious. Impairment levels at London Forfaiting Company are also being kept under observation in view of economic tensions in certain markets where the company is active.

4) What is it about Malta that motivated FIMBank to establish its headquarters here, and has kept FIMBank in Malta ever since?
The decision to base FIMBank’s operations in Malta was the result of a study commissioned twenty years ago by the Bank’s initial group of investors. The scope of this study was to establish a specialised trade finance bank in a country that has a robust regulatory framework, an extensive range of professional services and an efficient cost base. Malta ticked all the right boxes in this regard, and I strongly believe that the decision makers at the time made the right choice. FIMBank has since then reaped the benefits of being based in a country with a respected tradition in banking and a highly productive and educated workforce.

5) How strong is FIMBank’s connection with Malta ?
In terms of our presence in Malta, the strongest signal that FIMBank plans to remain in Malta for the long haul is our head office in St. Julian’s. This was custom-built to our requirements and to cater for the Group’s  future growth. On a practical level, we strive to create added value for Malta and we also assist in re-directing international trade and finance flows through the island. Moreover, we take every opportunity to promote Malta as a reputable financial services centre, especially when we organise or participate in international conferences.

6) How has the entry of new institutional shareholders, which took place in 2013, affected FIMBank to date ?
Earlier this year, Burgan Bank and the United Gulf Bank (both members of the KIPCO Group), jointly increased their stake in FIMBank to just over 80% as a result of a voluntary bid announced towards the end of 2013. The entry of these institutional shareholders has radically shifted the parameters within which we used to gauge FIMBank’s future. This development has effectively widened our horizons and opened up a plethora of opportunities for the Group. Thus throughout these past months, we have been seeking to get a better insight and understanding of  the KIPCO Group, the largest diversified holding company in the Middle East with consolidated assets exceeding USD 30 billion. As a result, we are now  working towards establishing new intra-group business relationships and securing better funding opportunities from our new shareholders.

7) FIMBank recently expanded its scope in India and Russia by increasing its shareholding in its subsidiaries.  Is this a change in strategy?
Our international factoring strategy is being adjusted to take into consideration the fact that we now form part of a premiere Middle Eastern conglomerate, have better access to cheaper funding, and have the opportunity to gain control of joint operations through a majority stake. Consequently, FIMBank has increased its shareholding in India Factoring to 79% while acquiring the shareholding of our Russian partner in FactorRus, taking us to 80% shareholding, with IFC (part of the World Bank Group) holding 20%

8) Your international network covers a number of other countries including Dubai, Brazil, Lebanon and Singapore. What other markets are you looking to expand into?
We are  planning to enter the Greek market and are currently in the process of opening a branch in Athens. We are also looking towards expanding our activities in Central and South Eastern Europe. Last year we signed an agreement with PRVI Faktor, a Slovenian factoring services and finance company with operations in this region, where we have undertaken to acquire 40% of the participating interests, subject to the satisfaction of certain conditions which include competition clearance and regulatory consents. We have also initiated discussions with counterparties in Latin America in connection with an existing going-concern in Chile. We are working on a number of new projects and initiatives aimed at further expanding our footprint and diversifying the existing portfolio and scope of our offer.

9) How would you describe your management style?
I have a reasonably strong work ethic and a clear and honest regard for my own abilities and potential.  If I really want something, I do not see it as a sacrifice to work to achieve it.  If one has integrity, a clear vision of what one wants to achieve,  and if one shows respect to and empowers employees, the results will come. I would describe my management style as one that  combines respectful collaboration with disciplined productivity.

10) How do you see the future for the FIMBank Group?
I see a very bright future for FIMBank. The Group can now boast a strong reference shareholder with a good rating, which has already started facilitating access to funding and has led to a stronger equity base. We will remain focused on highly specialised trade-related business, and the kind of complex commodity transactions that require a more personalised service and bespoke approach. Our strength has always been our ability to re-invent ourselves to adapt to the new realities and challenges, and Malta will continue to serve as our launch pad for our next phase of expansion.