MBR SEPTEMBER ALL LR

Malta Business Review
COVER STORY OF THE MONTH
COVER STORY OF THE MONTH
Malta Business Review
Ready for the Challenge
by George Carol
Roderick Psaila has passed his whole career in the banking sector. Academically qualified as a banker
and economist, Roderick started his working life at the Central Bank of Malta, where he spent eighteen
years - taking out a short period when he was engaged by the European Central Bank - before
taking the plunge into the industry locally in 2008. AgriBank is Roderick’s third bank he
started himself and he has occupied the position of CEO from day one.
MBR: Would you say it is time to diversify
into different business streams?
RP: Yes. The Board has for the last year been
actively discussing diversification of our
banking model and a decision was taken a
few months ago on how to move from being
a monoline bank to opening up and which
business streams the Bank would delve into
as from this year. So yes, the time is now.
MBR: Now when you talk about the strategy,
the overall strategy, up till now, as that the
bank has focused on interest income, now
you are moving to fee income. How is the
bank preparing for this change?
RP: AgriBank is now moving towards offering
corporate banking services, starting with
opening bank accounts for corporates and
servicing those accounts with the required
payments. Without doubt, it was a challenge
to adapt from being a lending bank to
offering other services. We invested in new
technology, systems, human resources and
knowledge. I reiterate though, when the
fundamentals are strong and when one has
a team of professionals who are willing to
step up to the plate, then looking back to the
last three months, we all agree that it was an
enjoyable experience.
MBR: Is AgriBank thinking about diversifying
into other jurisdictions and industry sectors,
aside from UK and agriculture?
RP: Indeed, we are targeting companies
registered in Malta and belonging to different
industries, even though the plan is to focus
mainly on a particular sector during the
last quarter of 2017, namely gaming. This
means that the Bank will be able to achieve
significant diversification in its model, both in
terms of interest income-to-fee income, from
servicing UK clients to accepting companies
locally, and also from Agriculture to a wider
spectrum of industries, hence strengthening
AgriBank’s banking model immediately.
MBR: How does AgriBank expect to
beat competition locally for this market
segment? What kind of service and support
will you be able to offer?
CFO – Paul Grech; CEO – Roderick Psaila
MBR: You have been AgriBank CEO for five
years or so. Of which, if you had to pick one,
achievement have you been most proud?
RP: You are right, five years at the end of
October as CEO and a year before that, in
which in tandem with the CFO of the Bank,
Paul Grech, we obtained the bank licence and
set AgriBank up from scratch. I am actually
proud of what we have achieved during these
five years, where we have built a bank which
is not just able to address today’s challenges
but can easily be scaled up without breaking
up the present structure.
Certainly, if I had to choose one achievement,
it will have to be the team of colleagues I have
managed to amass, a group which is relatively
young, knowledgeable, motivated and still
with the fire in the belly to achieve more.
MBR: How were these years and can you tell
us about the main challenges AgriBank faces
today and how your past in the regulatory
sector assisted with these tests?
RP: AgriBank has not been designed as the
typical brick and mortar retail bank, similar
to the conventional banks which us Maltese
are familiar with. In building this Bank, we
had to regularly break into new grounds and
our regulatory knowledge and interpretation
of the banking rules was fundamental. We
started by passporting the banking licence
issued by the MFSA to the UK, so we could
do business there. The Bank reaches out
to farmers in the UK through brokers and
finances their ongoing farming projects
including green energy initiatives, and
therefore a solution had to be found on
how to channel the funds to farmers and be
able to receive the servicing of the loans in
an efficiently manner. Another innovative
move was to gather deposits online from the
UK, using comparative websites and online
due diligence of UK depositors. Massively
successful.
AgriBank is now moving
towards offering corporate
banking services, starting with
opening bank accounts for
corporates and servicing those
accounts with the required
payments.
Building the loan portfolio though, in such
a niche market was not easy and despite a
number of setbacks along the way, the Board
had decided to persist in achieving our breakeven
point singularly through the Agriculture
lending model. And here we are.
The Team
RP: There are two answers to your question.
As statistics show, the local economy has been
growing at an impressive pace in the last years
and most of this growth has been fuelled by
the private sector. Foreign direct investment
has been flowing to Malta and hundreds of
new companies are being registered every
month. The Banking sector on the other hand
has struggled to keep up with this pace and
more often than not, companies are finding it
difficult or at least time-consuming to obtain
banking services. Thus, the first answer is
that there is space for new participants in the
market. The second answer is that we will not
compete on pricing but on agility and quality
of service delivered to clients. I do have the
utmost respect for my fellow bankers but we
believe that we can do better. My team has
been preparing to go live for the last three
months, particularly with the upgrading of
our banking system and the introduction of a
new internet banking platform, which is very
user friendly.
AgriBank is ready for the challenge.
MBR: What has contributed to the stability
in board and senior management?
RP: Perseverance and determination. Each
one of us is determined to make this bank a
success. Indeed, the Bank has a very strong
board of directors. All directors bring different
skills to the table. Joe Borg as Chairman is one
of the prominent legal minds on the island;
Victor Rizzo Giusti is a banker with expertise
in compliance and risk, and he also Chairs
the Credit Risk Committee of the Bank; Frank
Sekula worked for banks like Jefferies and
Barclays Capital during his career; Stephen
Muscat is a seasoned accountant and Chairs
the Audit Committee of the Bank; and
Mario Vella has held top positions at HSBC,
particularly in credit. Paul Grech as CFO
and myself are the two Executive Directors
who also sit on the Board. Most of us have
been here from the outset and this provides
continuity and the appropriate support to the
whole team.
the Bank will be able to achieve
significant diversification in
its model, both in terms of
interest income-to-fee income,
from servicing UK clients to
accepting companies locally,
and also from Agriculture
MBR: How important is corporate
governance for the Bank?
RP: It is key to our operations at AgriBank. In
fact, the Board meets at least eight times in a
year, which is unusual for small banks like ours
and every board meeting is minuted in detail.
Same goes for the Credit Risk Committee and
the Audit Committee, and these minutes are
kept up to date and verified by all members.
It is important to note that the majority of the
board members of the Bank are independent.
MBR: Is there any specific industry you are
going to target more than others at the
outset?
RP: As mentioned above, the Bank will
address the shortage of banking services
being offered to gaming companies by the
local banking sector. As a principle, we prefer
to transact with regulated entities and the
excellent job carried out by the Malta Gaming
Authority in regulating and supervising
gaming companies gives the Bank comfort.
Hence going forward, gaming companies
registered in Malta have the opportunity
to avail themselves of professional banking
services locally. Naturally, extensive due
diligence will be performed on each applicant
and the risk profile of the prospective client
will have to be within the parameters of
risk appetite established by the Board. The
difference that we plan to make is that the
onboarding process will be quick and efficient.
MBR: Is there any intention to start even
more business streams, going forward?
RP: There certainly is and the Bank is
already making preparations to embark on
new challenges. However, in line with our
philosophy, we shall introduce additional
business streams only once we have
established ourselves in what the Bank is doing
at present. The Bank will succeed but shall not
take unnecessary risks along the way. MBR
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