Ardshinbank’s vision for HSBC Malta? A ‘phigital’ Mid Med Bank

Major players in the local banking market have reached impressive growth rates. HSBC Malta is lagging behind. One Armenian commercial bank sees this as an opportunity to build up a purely Maltese institution and turn it into a hub for EU expansion.

Ardshinbank, an Armenian commercial bank, knows what it’s like to acquire the subsidiary of a major banking group. Last year, the bank spent 10 months finalising its takeover of HSBC Armenia. It only took the bank a couple of more months to submit a bid to acquire another one of HSBC’s units, this time in Malta.

David Sargsyan, the deputy CEO at Ardshinbank, told MaltaToday that the bank sees an untapped potential at HSBC Malta, especially given the performance of other banks in the market. “Global players, especially in markets like Armenia’s and Malta’s, have been pulling up the parking brake and avoiding bigger operations,” he said. 

Sargsyan said his company’s vision for HSBC Malta is to have a Maltese operation that works as a stand-alone business, in no way integrated with Ardshinbank’s current operation in Armenia. This would involve bringing back a number of services that have since been out-shored, and bringing back the bank’s old brand: Mid Med Bank.

But why rebrand to an old name? Sargsyan said that a rebrand would align with the company’s long-term vision, which would see HSBC Malta transformed into a hub for EU expansion. To do this, Sargsyan said Ardshinbank cannot use its own brand.

“From there, we started looking into what type of brand should be in place. The first thing we did was check the name of the bank before HSBC came in,” he said. “As we understand, this is such an obvious move that it’s probably also what some other bidders or potential rivals are thinking.”

A ‘phigital’ banking approach

Sargsyan’s philosophy on digital banking is that a customer should be able to do anything from their mobile phone.

“Literally everything. You want to send money? It should be there. Want to place a deposit? Buy securities? Apply for a mortgage? You shouldn’t have to go into a physical place for an application.”

It’s not lost on Sargsyan that people still depend on branch-based operations. “Everyone thinks they can substitute everything digitally. In practice, people don’t love it a lot.”

“The younger generation uses more digital, but even they grow into their 40s and 50s and change their behaviour.”

Sargsyan said 92% of Ardshinbank’s operations are digital, but that doesn’t mean people don’t visit their physical branches. “It’s a matter of socialising even. That’s very important to keep if you want business to grow.”

Instead, Sargsyan prefers the term “phigital”, a balance between physical and digital investments. “We’re more on this type of vision for the future. We have to invest in branches, renovations, put equipment there, have nice places for people to sit. This is our concept of the future.”

Existing HSBC Malta staff would be retained

HSBC wants to pull out of Malta and is seeking buyers

Sargsyan said EU expansion plans are part of a far longer-term vision for HSBC Malta. Before positioning the bank as a hub for EU expansion, Ardshinbank would first create a self-sufficient standalone business in Malta without relying on outsourced services.

“The first and most important stage is to achieve a high level of self-sustainability and a fundamentally sound business practice in Malta. That would be in the medium-term. From there, the next step is to go further and inside other jurisdictions.”

When it comes to expansion, Sargsyan said the strategy is to move into digital channels. “We already invested a lot in fintech, heavy digitalisation of retail operations. We feel that we have a certain competitive advantage, especially in Europe, to go further with this type of product.”

He reassured that the existing HSBC Malta staff will more than likely be retained during and after the takeover. His bigger concern is whether the bank will be able to find even more workers needed for the takeover in a short amount of time.

As far as company culture is concerned, he gave a rough translation of an Armenian saying: “You cannot go with your own rules into other people’s church. I don’t think you have this sort of saying in Malta. I think we are the ones who would have to change our attitudes.”

No fears for EU-level due diligence

Concerns have been raised locally over the historic Russian business ties of Ardshinbank’s majority shareholder. Maltese stakeholders might be put off by this, but Sargsyan said there’s no cause for concern.

“A lot of western companies were doing business in Russia at the time. Even McDonald’s was in Russia. Everyone was there, then [the Ukraine war] happened and everyone closed their business. That was the case for him.”

Sargsyan’s not afraid of EU-level due diligence either. He said that Ardshinbank has already taken over HSBC in Armenia, and the bank has a number of correspondent partners in Europe. “If there was anything to be concerned about, those due diligence procedures would have picked it up.”