Factoring in the emerging markets

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					  Factoring Focus
  Fimbank Q&A

       Factoring in
       the emerging
  GTR catches up with Gilbert Coleiro, managing director of Fim                                  America (Brazil in particular) will underline

  Business Solutions, and Silvio Mifsud, executive vice-president, head                          the success of the product and the need
                                                                                                 for those markets to have access to these
  of information and administration, Fimbank, to find out more about the
  bank’s future in factoring.

  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.                                                                              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.    GTR: What type of companies are the
                                                                                                 main users of Fimbank’s factoring
  GC: Clearly the factoring strategy has been      GTR: Do you have any success stories          services?
  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
  which is critical for this labour intensive                                                    good alternative either to mitigate risks (risk
  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
                                                     The sub-prime
changing?                                         crises will create more
SM: Factoring has become increasingly
                                                  need for factoring
important and is being increasingly               and increase margins
                                                  due to the increased
recognised as an important product within
the financial markets but in particular in
emerging markets. The sub-prime crises            demand
have accelerated this process in my opinion,
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
                                                                                                   Coleiro: Many markets untapped
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
                                                  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         Mifsud: Technology is a critical success
task.                                             factors.                                         factor

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