banif finance, ltd.

The company formally known as Banif – Banco Internacional do Funchal, S.A. was transformed intoBanif – SGPS, S.A., (the holding company of the Group), and a new bank with the same name, “Banif –Banco Internacional do Funchal, S.A.” was created by the transfer of the whole of the banking activity ofthe former company and of the holding company of the Group to Banif. As a result Banif now acts only asa commercial bank and no longer as a holding company of the Group.Banif is 100 per cent. indirectly owned by the holding company of the Group, Banif – SGPS, S.A.,which has its shares listed on Euronext Lisbon.Banif operates in mainland Portugal and in Madeira. In Madeira, it has approximately 26 per cent.market share of the local commercial and retail banking market, concentrating on relationship bankingthrough two commercial divisions:(i)(ii)retail banking, comprising a distribution network of 33 branches, which offer a wide range ofbanking products and services (such as mortgage and consumer loans, credit and debit cards,deposit and investment products, commercial lending and bancassurance);private banking to high net worth individuals and institutional clients, offering tailor-madeproducts and services, and corporate lending to the larger corporations in the Madeira Islands.Banif benefits from a close relationship with the Regional Government and the local administrationsas it is the main financial institution not only managing the public offices accounts, and where most of thepublic servants’ wages are paid, but also in the financing of the main projects and public works that takeplace in Madeira.In June 2004 the loan portfolio of Banif in Madeira was approximately Euro 925 million and the totaldeposits from customers amounted to over Euro 1,373 million. For the same period fees and other incomereached Euro 4.3 million, a contribution of 18.9 per cent. of all fees and other income generated by Banif.In mainland Portugal, Banif operates in two main market segments:(i)(ii)retail banking;corporate banking, which provides services to small and medium sized corporations.The retail banking division, “Banif Retalho”, was restructured in 1998. Its 117 branches in mainlandPortugal have been organised into “sales centres” aimed at marketing the Group’s products. Front and backoffice operations within the branches are limited to the provision of basic cash transaction services, therebyreleasing approximately 70 per cent. of staff to support marketing and customer service. “Banif Retalho” iscomplemented with a private banking unit specialising in services to high net worth individuals andinstitutional investors.To support the retail network, increase sales and as a way to capture new business without increasingfixed costs, a network of Financial Agents was created in 2001 with three different types of agents:Commercial Agents, who sell all the products available to Banif’s clients; Real-Estate Agents, which sellexclusive mortgage loans and “Assurfinance” Agents, who sell mainly insurance but are being givenincentives to sell Banif’s other products to their clients. As of June 2004, the volume of business totalledEuro 43.5 million, which was generated by a network of 703 Financial Agents (119 assurfinance, 160 realestateand 424 commercial agents). These agents limit their activity to introducing the client and identifyingthe closest branch, which is, then, responsible for approving and concluding the operations.The total loan portfolio managed by “Banif Retalho” as of June 2004, was approximately Euro 1,481million, total customer deposits amounted to approximately Euro 1,418 million and total fees and otherincome reached Euro 9.2 million, 40.7 per cent. of Banif’s total.The development of technology, the growing demand for alternative distribution channels and Banif’sconcern to continually satisfy the needs and expectations of it’s clients, led Banif to launch Banif@st in2001.52