15 - 21March 2001

Bank specialises in ship scrapping

By David Kelleher

Mr Najeeb H.M. Al-Saleh is man of few words. Yet in those few words, he comes across as a cool, patient man who shuns publicity but knows exactly what he wants and when. In fact, the bank he set up in 1994 and which has for the past six years grown from small entity to a fully-fledged merchant bank, reflects this image.
First International Merchant Bank (Fimbank) was set up in 1994 as a credit institution regulated by the Central Bank, permitting full-banking activities including the taking of deposits – and Malta was an obvious choice.
“When we decided to set up the bank we carried out a study for our investors to see what sites were available to us. We had looked at Cyprus, London, Bahrain and Geneva, however Malta came on top of the list for what we needed,” Mr Al-Saleh, chairman of First International Merchant Bank told The Malta Business Weekly.
The main reason for setting up our business here, he said, was the fact that a number of banks were already set up and the country had a strong regulatory body.
“We did not want an offshore bank. Our decision to set up the bank nearly coincided when the BCCI troubles started. There are many other plus factors that helped us choose Malta – proximity to Europe and N. Africa. The Maltese speak English and Maltese is very similar to Arabic, the level of education is very high and the schools are excellent,” Mr Al-Saleh said.
The majority of the shareholding is non-Maltese, with the head office based here in Malta and a representative office in London. The London office works on business development while all transactions are conducted through the head office in Malta.
Fimbank is licensed by the Central Bank of Malta to provide trade finance services to Maltese residents and non-residents, corporations and other financial institutions, in currencies other than the Maltese lira. This has not proved to be a problem for Finbank.
“Our business is in short-term trade finance and all business is usually carried out in dollars. We operate a merchant bank approach to the provision of specialised trade-finance services to customers, banks and individuals around the world, but with a particular emphasis on the Middle East, Africa and Asia. Our services include barter, counter trade and forfeiting as well as traditional documentary and short-term credit facilities. Foreign exchange, deposit and private banking services are also available,” he explained.
However, Fimbank also specialises in an area that is unheard of in Malta – the financing of ship scrapping and ship breaking. Finbank is particularly well established in this niche on an international basis and holds nearly 20 per cent of the world market. Last year, of the 470 ships that were scrapped, Finbank financed 90.
“One of our main lines of business is the ship scrapping and ship breaking industry. We provide finance for those ships that are on their last few trips before going to the scrapyard. This is quite a lucractive business,” Mr Al-Saleh told The Malta Business Weekly.
Fimbank lays great emphasis on customer satisfaction. The bank does not have front office counters or tellers. It does business in comfortable settings and in private meeting rooms.
“We believe in people contact and not just a one shot transaction. We try to be different and put some extra effort into doing business.”
This customer relationship is reflected in the bank’s performance last year. Despite the far from remarkable international scene, Fimbank continued to create new relationships and contacts to source new business.
Operating income in 2000 increased by 32 per cent to US$5.9 million, with US$2.8 million being net interest income and US$3.1 million generated from fees and commissions. According to the bank’s financial statement for 2000, Fimbank has reached a sustainable rate of growth and returns on equity of 8.5 per cent and on assets of 2.9 per cent are in line with industry levels for similar sized institutions.
Malta’s membership of the EU is one factor that the bank is monitoring. However, Mr Al-Saleh does not see any problems in this regard. “When we came here there already was an association agreement with the European Union. Obviously, we are monitoring the situation but in our case, regulation is not an issue,” he said.
Asked what the bank’s plans are for the short- and long-term, Mr Al-Saleh doubted whether he could answer in a few minutes. “Our short-term plan is to continue consolidating what we did over the past six years. We have seen that the idea works. Our long-term plan is to implement what we have done.”
Is the bank considering an IPO?
“A local listing is possible. Everything is possible, however I think it is a bit too early to say.”