Looking back on a decade of banking

Thursday 24 October 2014

Tony Mahoney left HSBC Bank Malta over a decade ago. When he completed his contract at Bank Dhofar in Oman, he had to decide between the UK and Malta. He told Vanessa Macdonald that the lifestyle and friendship in Malta won, and he accepted a role as non-executive director of FCM Bank.


Tony Mahoney


You went from a bank with thousands of employees under your responsibility to a bank with a dozen staff ... What was the attraction?

My role at FCM is a non-executive one. I wear a number of other hats, including fundraising for companies around the world, for everything from the latest vaccine for cancer therapy (which I am dealing with right now in the US; we got FDA approval a few weeks ago) all the way through to shipping companies in Greece and property companies in Italy.

I deal with all of these from Malta, which is a great place from which to operate. These contacts bring a lot of business to Malta – such as the cancer vaccine, which could bring some activity here in the second phase aimed at Europe, the Middle East and Asia.


I associate your time in Malta with a turnaround in banking as the HSBC brand shook up the status quo and resulted in considerable investment and upgrading by its rivals. After 15 years, how do you see banking in Malta?

When I arrived some 17 years ago, there were literally four banks– but we were the first real foreign bank. At that stage there was a small market and not much competition. It is now much greater.


People still moan that HSBC got Mid-Med for a song. But they also wonder whether the leap in quality in other banks and their investment would have happened if HSBC had not come along...

HSBC did not get it for a song.The negotiations were very tough and that was the price that the bank was prepared to pay. I was in Cyprus recently and they said they wished they had kept HSBC because had they done so, they would not have had the problems they had. It could well have been a factor. Banks do three things. They place money, they take money and they move money. As long as they stick to their principles, they will always do well. The capital ratios of the banks in Malta have remained high throughout the crisis. It is one of the very few countries I know that has hardly been impacted by the global financial crisis, which is incredible. It is down to prudent banking, and strong but robust regulation. The presence of HSBC helped, in my opinion, but the real issues are those...


You mentioned that competition is much higher. Have we reached saturation?

Overall, Malta is very well banked. There are 26 banks in total here, five of which are core banks. Then there are banks such as FCM whose job is to keep the big banks’ pencils sharp, so to speak. They cannot afford to become complacent because they know that banks such as FCM are willing to differentiate in certain niches — for FCM, deposit taking at good interest rates, and its service. There is always scope for more competition in a market but over the past few years competition has grown so much that I cannot envisage that a big new banking presence would arrive here. Given the liquidity, it might attract deposit takers but in terms of lending, there is enough liquidity for Malta to achieve all its goals. There is still scope for some consolidation, though.


You’ve had a lot of experience in the Middle East. One area we have not tapped is Islamic banking. Do you see a role for Malta to play there?

It is always possible but with core banking it is always best to stick to what you know and that is traditional and international banking. I introduced Islamic financing at the bank I worked for in Oman, and it has done quite well. Is there a conceivable demand here? Yes. Is there enough scale to make it worthwhile? That is what I would question. Is Malta a natural place to have an Islamic banking window? In many ways it is the most natural place within Europe – but it is not a natural place given the complexities, skills and competences in the Middle East.


You were also involved in family offices, an area that FinanceMalta has been promoting. Is there scope for these services in Malta?

Definitely. Family offices have tended to be based around Switzerland, which is a remarkable country but one which has lost some of its shine. I am speaking right now to a number of family offices who are looking to invest into Malta and if they do, I think it would be good for the Maltese economy.


Do we have the skills required?

One of the great things about Malta is its people’s skills and they are perfectly capable of handling the demands of a family office. The Maltese work hard and study to get better qualifications. The message is clear: international companies like doing business here because it is easy to find a pool of intelligent, numerate and well spoken people.


Is there anything we should be doing as a jurisdiction that we have overlooked or not yet looked at?

The golden rule – which Malta has followed – is to take things step by step, which it has done. Banking and rushing do not go well together. Malta is good at taking its time and doing things in the right way. There are always areas where things could be done better. But I think Malta is actually already doing quite well... As a jurisdiction it has loads of ambition, it takes advantage of its EU membership very competently, and it has been able to achieve a status which is quite special within Europe. It affords companies from the US, Switzerland, Africa, the Middle East and China a very good stepping stone into the EU without having to go through all the rigours of having to set up in other member states or stepping outside into Luxembourg or Jersey. Malta has managed to keep a very clean image and all it needs to do is to keep that image, working with the companies that want to do business here – but in a very smart way. For example, I was very impressed by the way that Malta handled the Cypriot crisis. I give credit for this to both the regulator and the CEOs of the banks. But if I can go back to why I came to FCM, I came to take a role here because it is a very interesting bank and it reminds me a great deal of the Midland Bank team I had here originally. One of them is actually here at FCM. I get the same positive, energised team, who are not mired in bureaucracy. I opened an account here for myself – and it was a pleasant experience.


You are not the typical foreign customer. In the recent EY Malta Attractiveness Survey, it was one of the gripes: that it takes too long to open an account.

I know that it can take a long time. One of the challenges that Malta has to deal with is balancing ‘know your customer with offering a fast service. Here at FCM, we open accounts for people who already have other accounts in Malta so it is a bit different for us. Wearing one of my other hats I was able to help a wealthy Chinese person last week who is looking to bring business to Malta as well as to open his personal accounts. It was tricky and we had to help him quite a bit. But of course, this investment could be very good news for Malta.


The Business Observer

Times of Malta