Banking Outside the Box – The FIMBANK Story

12.03.2012

Trade finance as a transaction banking product is a core banking business servicing the real economy assisting customers with their import and export requirements by providing financing as well as trade risk mitigation. Global trade relies upon accessible financing for trade transactions. Over the years FIMBank has established a reputation as a specialist in Trade Finance, and even though the Bank and the Group undertake a range of banking activities, Trade Finance remains FIMBank’s bread and butter.

                                                    

           Margrith Lütschg-Emmenegger, President with Armin Eckermann, Deputy President, FIMBank p.l.c.

I meet up with the FIMBank Group’s President Margrith Lutschg-Emmenegger President, and Armin Eckermann, Deputy President and FIMBank’s Head of Banking Group to learn more about this organisation. They explain how FIMBank started out as a simple set up operating steadily while keeping a low profile. Tucked away in a discreet office on the small island of Malta, the company styled itself as a boutique bank offering specialized trade finance services, with a strong focus in the   emerging markets. It is remarkable that after 16 years of operations the Bank has grown, matured and diversified its trade finance activities worldwide with a physical presence in more than ten financial centers  worldwide.

Margrith starts from the fundamentals and explains the Bank’s unique value proposition “Customers understand that they require the right partner to support their trading activities. They know that the larger global banks are refocusing on domestic markets and multinationals while of course presently reducing their balance sheets – which is easiest done by cutting down short term trade finance activities. The companies understand that these banks  may not be the best partners to  help them achieve more trade volumes to the growing emerging markets.”.  She goes on to highlight FIMBank’s strengths “FIMBank’s executives have the relevant insights, language and cultural awareness as well as an in-depth knowledge of traditional and innovative trade finance instruments. Our speciality is the provision of tailor-made trade finance solutions.”

I learn from Armin that the Bank grew steadily and that in September of 2003 it acquired London Forfaiting Company Ltd, a leading global provider of Forfaiting services. The Bank benefitted by  adding Forfaiting to its portfolio of services while at the same time  expanding its network of offices to reach strategic financial centres that include  New York, Sao Paulo, Moscow, Istanbul and Singapore.  Armin also highlights the Bank’s three strategic pillars: “As a specialist Trade Finance niche market player, Forfaiting, Factoring and Structured Trade Finance are the three strategic pillars on which we will continue to build our offering of diversified trade finance solutions to customers.”

I ask about competition and how a relatively small bank can survive in such turbulent times, where even the larger banks are struggling. Margrith explains how the traditional corporate-to-bank interface is becoming increasingly commoditized and that the competition for clients calls for innovative solutions. She explains how banks must really understand the challenges that corporates face and tailor make products accordingly in order to survive in today’s market.

Armin confirms that the Bank’ success is due to its capacity for innovation and diversification, which according to him is “an inherent part of the Bank’s DNA.”  He uses a real-life complex transaction as an example of how FIMBank supported the successful execution of commodities transiting  through six different countries before arriving safely at their destination.  “We helped Bauche SA, an international trading house which specialises in commodities trading such as sugar, fertilisers, coffee and rice, by providing a facility covering the shipment of urea from Indonesia to Abidjan, Ivory Coast on a cost insurance and freight basis.  The Bank structured the deal innovatively, catering specifically for the needs of Bauche to purchase, transport, stock and finally deliver the goods through six different countries and across continents, from Asia to Europe, to reach its final destination in Africa.” “The operation was a success”, he concludes “because we understood the customer’s concerns, studied the likelihood and consequences of the risks, built in risk mitigation measures and structured the transaction to the customer’s satisfaction.” Armin believes that “it is all really a combination of a systematic and creative approach to problem solving. When evaluating problems, you then need to have an efficient decision making mechanism in place. At FIMBank we understand that good decision-making requires a mixture of skills: creative development and identification of options, clarity of judgment, firmness of decision, and effective implementation. We are proud to be one of the few banks that can reply to customers’ requests and come up with finance proposals within 48 hours. We have built a solid reputation because our size also allows us to be efficient.”

Margrith agrees and adds: “Reputation is very important and a roster of third-party awards and media recognition further confirm a bank’s performance. Trade finance is truly about problem solving and facilitating business globally.” She goes on to emphasize the importance of relationship building: “What matters at the end of the day is the ability of the Bank’s relationship managers and trade specialists to deliver a host of traditional trade finance instruments to suit the customer. To build a reputation, relationships have to be cultivated with people in different markets and in different situations and this is one of our key strengths.”

I query Margrith about FIMBank’s competitive advantage. Margrith is unequivocal in her answer: “Relationships are critical to the way we do business and relationships are based on people. There is no doubt that the Group’s owes its growing reputation as a reliable global partner in the dynamic and specialist world of Trade Finance to its 165-strong  staff members .They are our competitive advantage and our most formidable asset.”

I ask about Factoring and how the Bank’s factoring operations are developing. Margrith explains that in an environment of increasingly open account commerce world trade needs factoring to support local trade and of course exports while managing risks. The crisis has brought about more receptivity  about factoring and the product’s ability to facilitate domestic and international trade while mitigating risks. The Bank is taking advantage of this increased interest in factoring and promotes the importance of this alternative financial solution and it advantages for both domestic and export-oriented businesses to create the required awareness again especially in the fast growing emerging markets which still today have little access to this product. FIMBank’s experience is that more customers are viewing factoring from a different perspective, not just the funding aspect. They see the service as offering a potential means of managing risks and providing cash management solutions. This is particularly relevant with regard to exports from emerging markets to the more developed ones and the intensified demand for supply chain finance.

In terms of factoring footprint Margrith explains how FIMBank actively pursues a strategy of establishing factoring joint ventures with leading and well reputed institutions in selected emerging markets.  The current network of factoring joint ventures includes Menafactors in Dubai, Levant Factors in Lebanon, Egypt Factors in Egypt, FactorRus in Russia, India Factoring in India, BrasilFactors in Brazil, as well as a strategic partnership with Romfactors in Romania. The FIMBank Group plans to continue developing its network of factoring joint ventures by expanding into Africa and the Far East in the future.

Finally, our conversation turns to FIMBank’s new home on the island of Malta. Margrith explains that the move to a new head office building this summer will be a major milestone for the Group. The FIMBank headquarters will become a prominent feature of the St Julian’s skyline. “Our new headquarters forms part of one of Malta’s largest and most prestigious projects, The Exchange Financial & Business Centre. We are very proud of this project and our new home will be a testament to the roots we have established on the Islands.”

On his part, Armin explains that: “The architectural design of the headquarters, both internally and externally, has been crafted by some of the leading Mediterranean design and architecture professionals which has added to the development’s iconic appeal and advanced functionality. Moreover, we have taken the measures necessary to ensure that our headquarters will be utilizing state-of-the-art technologies to ensure that the building will be eco-friendly, energy efficient and a comfortable place to work from. “

I ask one final question: “What is FIMBank’s promise to its customers?” Margrith’s reply carries the clear timbre of conviction: “Our customer promise is based on the provision of tailor-made Trade Finance solutions which are innovative, creative and flexible while exercising due prudence, and backed by cutting-edge technology. The Bank will continue doing what it has been doing from its inception: focusing on highly specialized trade-related business, and the kind of complex commodity transactions that require a more personalized service and bespoke approach.” Armin nods in agreement and as he accompanies me out of Margrith’s office and along the glass partitioned offices, I feel that the metaphor of banking outside the box fits this organization like a glove. The past years have seen financial institutions sail through the perfect storm and many have come out the worse for wear. The confidence which FIMBank exudes however, grounded on firm financial foundations and a dynamic corporate culture, bodes well for the future of this feisty trade finance specialist in the challenging times ahead. 

Interview by Business Money.
http://www.business-money.com/International_editions/02February12/pdfs/FIMBANK_feb2012.pdf

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