Factoring Focus
Fimbank Q&A
Factoring in
the emerging
markets
GTR catches up with Gilbert Coleiro, managing director of Fim
Business Solutions, and Silvio Mifsud, executive vice-president, head
of information and administration, Fimbank, to find out more about the
bank’s future in factoring.
America (Brazil in particular) will underline
Malta-based Fimbank has been steadily
has been extremely important for our recent
[GTR – At the beginning of 2007 Fimbank
carving out a niche for itself as a highly
strength of capital and confidence in our
established Egypt Factors, its Egyptian
specialised provider of trade and trade-
strategy.
joint venture in factoring together with
related financing.
the success of the product and the need
for those markets to have access to these
products.
Commercial International Bank in Cairo. It
The achievements of its factoring business
GTR: Which regions and sectors are
has also signed an agreement with Panama-
have been demonstrated by the recent sale
seeing increased demand for factoring
based Bladex (Banco Latinoamericano de
to the State Bank of India of its stake in
services?
Exportaciones) to set up a joint-venture
GTF, an Indian factoring company. The deal
factoring company offering factoring services
highlights Fimbank’s strategy of acquiring
GC: The product has gone from strength
across Latin America. In November 2007,
start-up factoring firms, rapidly expanding
to strength and the recent sub-prime crises
it launched Menafactors in the Dubai
their business before selling them on.
have made it even more important for small
International Financial Centre. The joint
and medium-sized enterprises (SMEs) and
venture has been set up with National Bank
GTR: What have been the key
banks equally. We see the emerging markets
of Dubai.]
developments in terms of Fimbank’s
with the biggest potential and need for the
growth over the last 12 months?
product – many markets are still untapped.
GC: Clearly the factoring strategy has been
GTR: Do you have any success stories
and will be critical for the development of
over the last year, where certain emerging
Fimbank with regard to the product offering
markets new to the concept of factoring
GC: Factoring is most useful for the SMEs,
as well as the IT development and support
have reaped the benefits?
but also for larger companies it can be a
GTR: What type of companies are the
main users of Fimbank’s factoring
services?
good alternative either to mitigate risks (risk
which is critical for this labour intensive
product.
SM: Our Indian joint venture is the very
protection) or to increase cashflows and to
The success and the successful disposal
best example, but also our recent projects
‘outsource’ labour-intensive administration
of our Indian joint venture offering factoring
in Dubai and Egypt, as well as in Latin
(including debt collection).
46 | Global Trade Review
www.gtreview.com
Factoring Focus
Fimbank Q&A
GTR: Do you think the perception of
factoring in the financial markets is
changing?
SM: Factoring has become increasingly
important and is being increasingly
recognised as an important product within
the financial markets but in particular in
emerging markets. The sub-prime crises
have accelerated this process in my opinion,
The sub-prime
crises will create more
need for factoring
and increase margins
due to the increased
demand
but the trend was there – it just increased the
After extensive research of the factoring
speed.
IT systems available on the market FBS
decided to partner with a leading global
GTR: Looking towards the coming
technology vendor to customise and deploy
months, what trends do you predict will
their software system as a full solution that
emerge in the factoring market?
could be easily extended to Fimbank and its
joint ventures (JVs).
SM: The sub-prime crises will create more
The model chosen to deliver this solution
need for factoring (and forfaiting) and
is via a hosted platform within the FBS
increase margins due to the increased
network operations centre in Malta. Through
demand, hence this is a good opportunity
this hosting service FBS provides access
for both products but probably even more for
to a fully managed system over secure
factoring
internet links for internal users as well as
Coleiro: Many markets untapped
clients. The advantages of this approach are
GTR: Are there any regulatory or legal
numerous and include: the opportunity for
issues that might affect the factoring
the JV to concentrate on its core competency
business? For instance, what will be the
– factoring; avoiding the need of local IT
impact of Basel II?
expertise and remove technical complexity;
reduced start-up costs as well as IT costs
GC: Basel II will make factoring even more
that are directly linked to the volume of the
important for SMEs as it might be the only
business; a significantly shortened time
source of funding for an unrated company.
to market; and peace of mind that all IT
Also, factoring companies often are not
operations are being handled by industry
regulated or have less stringent rules hence
specialists
offer a true alternative.
To date this platform is being used by
Fimbank in Malta as well as two JVs in Dubai
GTR: In terms of technology, has Fimbank
and Cairo with plans for new projects in Latin
implemented any new systems to
America.
facilitate its factoring business?
Given that the technology platform is now
proven we also have plans to extend this
SM: Deployment of the right technology
service to the general industry. We are
platform has been a critical success factor
also planning to include the integration of a
for our factoring strategy since inception and
selection of factoring back office activities
subsequently at the very early stages of the
as part of our service offering. This we
project entrusted Fim Business Solutions
believe will provide a very attractive value
(FBS), the Fimbank IT subsidiary with this
proposition both for new and established
task.
factors.
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Mifsud: Technology is a critical success
factor
MAY/JUNE 2008 | 47