The Malta Independent 20 November 2018, Tuesday

Five years in Malta – the Medbank experience

Noel Grima Sunday, 11 January 2015, 08:42 Last update: about 5 years ago

As soon as I entered the building on St Barbara's Bastion in Valletta, I realised I had been here before and it was when Mediterranean Bank CEO Mark Watson walked in to meet me, that I then realised I had interviewed this man before in this very same building.

I had come to interview Mr Watson some five years ago, when he had just joined Mediterranean Bank after he and his associates had bought it from its original founders.

Five years or more have now elapsed and in the meantime the bank has grown and developed. Not very much is known about it in detail, apart from its offers and through its branches, so I was there to find out how - and by how much - it has grown.

From being the new boy on the block, the bank has now become accepted and respected, an integral part of the Maltese banking sector.

When I interviewed Mr Watson five years ago, it had been a bank with just 6 employees and some €30 million as assets.

Mediterranean Bank plc was established in June 2004 and in July 2005 became a fully licensed Maltese credit institution, regulated by the Malta Financial Services Authority (MFSA).

In July 2009, Mediterranean Bank was acquired by new shareholders - a fund managed by AnaCap Financial Partners LLP, a UK private equity firm - and was recapitalised.

Today, Mediterranean Bank plc is a specialist bank with seven branches across Malta and offering a range of savings products and wealth management and investment services.

It offers competitive interest rates on the market on our fixed term deposit and savings accounts.

Its modern e-banking system allows its customers 24/7 secure access to their accounts and is further complemented by a friendly and competent customer service.

Originally, the Mediterranean Bank had been set up by some Swiss investors but its original business plan did not work and so the Swiss founders sold it to its present owners.

This was during the worst years of the banking crisis, when banks all over Europe were being closed down rather than opened.

The investors began with a different business plan and aimed first at establishing a presence in Malta and then offering a bank that was different from all the others.

Even at that time, Malta's banking sector was dominated by the two big banks which meant that, together with the other banks, Malta was well-served by banks. Nevertheless, the Medbank management was not deterred by this situation - just as it was not deterred by the huge banking crisis then raging in the world. It did not try to be another Bank of Valletta but specifically targeted the savings market.

The focus, right from the beginning, was to ensure profitability not just for the bank but also for its clients. It was, and still is, a low-cost bank, focused on a smaller number of services but in a highly specialised way.

The Maltese have a fantastic savings culture which had stood them well at the time of the crisis. Medbank focused on coming up with the right products at the right time to attract term deposits.

The bank developed a special relationship with its clients, conducted its business with them in a very personal way and with targeted products, thus offering clients a very different customer experience.

This approach has proved to be very successful: in five years the bank now has 22,000 retail accounts in Malta and a large deposit base.

The bank then ploughed its profits back into the bank and reinvested primarily in technology. It continually monitored its customer base to see what new products it could offer its customers. It aims at offering investors international bonds and also local products - on a 24/7 basis. At any time, the client can see what investments are in his name and how they are doing.

This proved to be a strong point with clients, and enabled the client to monitor his portfolio and build up wealth management.

Over the last five years, the bank has grown from its original six employees to 260. It now has six branches around Malta and Gozo and it recently opened an international office.

A year ago, the bank opened a branch in Belgium, the only online bank in that country, which is serviced from Malta and is called MeDirect. It services only Belgian clients and offers a whole range of investments and savings products.

So far it is a Maltese bank in Belgium but it will soon become a Belgian bank in Belgium that is serviced in Malta. The bank employs some 10 staff in Belgium who are supported by a call centre in Malta that employs French and Flemish speakers.

MeDirect already has some 10,000 Belgian customers. Furthermore, the bank's capital base of €50 million in 2009 has now grown to €220 million. This measure of the Medbank success is mirrored by a balance sheet showing €2.4 billion.

The bank's next move was to offer Malta a corporate bank - the Mediterranean Corporate Bank - which was opened shortly before Christmas.

This is what lay behind Medbank's purchase of Volksbank, an Austrian bank aimed at the corporate sector, offering Forex and other services. The Mediterranean Corporate Bank offers not just Forex but also other services such as sourced in capital markets targeted at corporate clients, delivering corporate solutions. It is the first such bank in Malta.

Medbank also has an office in London that is staffed by 20 people, mainly engaged in analysis and research.

Today, Medbank may be considered Malta's third bank by capital and by deposits, although it is not third by the number of customers.

In addition, Medbank also offers Charts Investment Management Service Ltd, which was established in 1985 and is licensed and regulated as an investment services provider by the MFSA.

In 2010, Mediterranean Bank acquired a 65 per cent shareholding in Charts in order to expand the client portfolios of both entities through synergy and to benefit from shared resources.

Charts offers advisory and discretionary investment services using various instruments, such as stocks, funds and bonds on listed local and international exchanges.

Medbank is proud that most of its staff - 90 per cent of which are Maltese - have joined them with significant Maltese banking experience.

Medbank did not form part of the ECB Asset Quality Review in the summer but, as a result of its growth as a fully Maltese bank, it now is completely integrated in the ECB-managed Banking Union that is being formed. The bank is considered to be a strategic bank in Malta but, compared to other banks here, at this stage does not have to carry the costs these banks are required to carry.

The bank's capital base and assets are very good quality and are also very diversified. In addition, it has a robust credit process that is as good as one can find in larger international banks.

Medbank's business plan is very different from that of other banks. It has lower operational costs than the big banks and it is this that enables it to offer advantageous rates.

In its first years in Malta, the bank offered headline rates that were higher than those offered by the big banks at a time of low rates. It could do this because its operational costs were, as said, lower but also as part of a strategy to attract a solid customer base. It was successful in this and these high rates have now been moderated.

In addition, the bank does not offer mortgage business or other services that could absorb a heavy workload on the part of the bank's staff. The service it delivers to its customers aims at helping them maximise their investments.

Five years after its launch, Medbank is here to stay and it is helping its investors in a significant way to build up their holdings and add value to them.

The bank has always been part of the Depositor Customer Scheme and its deposit ratio is above that required by the ECB.

Strict Compliance

Mediterranean Bank plc is a fully licensed Maltese credit institution, regulated by the Malta Financial Services Authority (MFSA)

  • The Mediterranean Bank operates under and applies theEuropean Union banking regulatory framework

Sound Foundation

  • Mediterranean Bank forms part of a European banking group that maintains amongst the highest prudential ratios in Europe
  • Financial characteristics: (as of 31 March 2014, audited)
    - Total Assets: €2,203.65 million
    - Core Capital Ratio: 14.25%
    (minimum regulatory requirements: 8%)
    - Liquidity Ratio: 148.7%
    (minimum regulatory requirements: 30%)

Focus and Expertise

  • Mediterranean Bank is a specialist bank focusing on the provision of market-leading savings products and wealth management and investment services.
  • Its highly experienced and capable management represents a blend of international expertise and the experience of top local banking professionals.

 

 

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