Little has been written about the sale of Banif Bank Malta to a Qatari investment firm which specialises in takeovers and the eventual re sale of assets. The deal had in fact been concluded around eight months ago – in late December 2015 when Octant Group took over the shareholding of Banif Bank Malta from its Portuguese owners to the tune of 78% of the share capital.
The shareholding was acquired by the Al Faisal Group headed by a Qatari billionaire with the name of H E Sheikh Faisal Bin Qassim Al Thani who incidentally was awarded Gieh ir-Repubblika last year by the Labour government. In fact, Prime Minister Joseph Muscat has trumpeted this ‘investment’ as the Qataris gaining a foothold in the Maltese economy – however the story of such takeovers is obviously much different.
It is intriguing to note that Banif Bank was exposed to the tune of EUR 2.4 million for a loan made to Café’ Premier and that this was one of the first deals conducted by a Labour government. Furthermore the MFSA had been insisting for a fresh injection of capital of around EUR 17.5 million with a possible dilution of local shareholding but this appears not to be the case as local shareholders will retain their stake although how valuable this is remains to be seen.
Banif was incorporated in 2007 but commenced operations in 2008 opted for the more expensive strategy of setting up a branch network that presently consists of 12 branches in Malta and Gozo. Its stated aim is to capture 10-20 per cent of the local market and to operate 22 offices. This implies a costly structure.
It is not surprising therefore that, as at the end of 2013, Banif had run up accumulated losses of €10.9 million (one-third of its paid-up capital of €32.5 million). In that year it returned a post-tax profit of a mere €124,000 i.e. lower than the €173,000 registered the previous year after four years of successive losses totaling €11.17 million as a result of which the bank was constrained to increase its paid-up capital by €7.5 million (from €25 million).
It is significant that net impairment losses increased steadily and stand at €1.32 million as Banif’s loans and advances rose from nearly €7 million in 2007 to €460.6 million in 2013. One wonders if higher impairment losses would have completely wiped out the insignificant 2013 profit had not the bank been relieved by the government of the much commented upon lending of €2.4 million to the former temporary leaseholders of the Café Premier in Valletta.
Out of €460 million of loans and advances to banks and customers as much as €117 million (25 per cent) were classified as ‘related party balances’ i.e. lendings to the parent company; related banks; and also to Banif’s directors. It remains to be seen if specific impairment losses will become necessary in light of the parent’s financial problems and the general uneasy banking situation in Portugal.
On the positive side, Banif managed to reduce significantly its loans and advances exposure to banks from 57 per cent in 2008 to 26 per cent in 2013. Customers’ deposits show a remarkable increase from €21.6 million in 2008 to €554 million (76 per cent of which are locked in on term deposits) in 2013. Thus it is clear that Banif’s marketing was effective.
The regulator is said to be insisting on a further capital injection of €17.5 million with a possible dilution of the existing 21.52 per cent stake held by local shareholders, who may well decide not to take up their option for increasing a shareholding on which, to date, they have received no dividends.
It will be recalled that these developments resulted in Banif publishing its 2013 results at the end of May i.e. one month later that the statutory deadline. This attracted a lot of comment in the printed media at the time but so far Banif has not come up with news of any developments on its search for a new majority shareholder (it eventually found the shareholder in late 2015). Presumably such shareholder would also be expected to take over the subordinated unsecured loan of €5 million made in 2012 by the parent at a very high interest rate of 10 per cent. This is repayable in 2017. So far no news on this has been forthcoming.
Banif Bank was an important part of the local economy with several branches opened in strategic population centres such as St Julians, Attard, Fgura and Birkirkara. Its main target was to attract young, affluent professionals to its accounts offering them attractive interest rates for home loans as well as other facilities.
Al Faisal Holding, one of Qatar’s leading private companies played a significant role in the development of the Qatar economy and infrastructure attracting many foreign investments and creating immense career opportunities. Established in the 1960’s as a small trading company in spare parts, Al Faisal Holding was able to keep pace with the prosperity and growth of Qatar to develop and nourish its business opportunities. The founder of Al Faisal Holding is H.E Sheikh Faisal Bin Qassim Al Thani, a well-known visionary entrepreneur in the region that has achieved success building a diverse business portfolio that is known on the local, regional and international level.
On its website, Al Faisal Holding says it ‘has many divisions operating under its umbrella; Property, Hospitality, Construction, Trading, Transport, Entertainment, Education, Services, and Information Technology Division. Recently Al Faisal Holding is also focusing on further developing its Hospitality sector and hospitality related services’.
Al Faisal Holding is not only considered a leading business entity, but it is also regarded as a leading player in promoting the heritage and education of Qatar.
‘Al Faisal Holding aims to continue to grow in all sectors with special focus on the hospitality and leisure sectors locally and internationally, supported by strong business activities. Al Faisal Holding shall continue to move forward in step with the major developments that are rapidly taking place in Qatar and the Globe’, it added.