AFFIN Merchant Bank Bhd, which will be showing its second year of profitability since its turnaround in 2001, is aiming to be a strong niche player in the liberalised environment.
“We are working towards fortifying our position especially among key clients within the institutions, state governments and agencies as well as small and medium scale industries (SMIs),” said its president and chief executive Datin Zuraidah Atan.
All the time, the emphasis is on building and strengthening relationships.
In an interview with StarBiz Zuraidah said: “We want to do more than just transaction-based deals where we just hammer out the details in a negotiation and arrive at an agreement. We want to meet clients and develop that into an art, invite them over for coffee and enjoy the process in style.
“They may not have a deal for me today, but when they have one, I want to be there. Keeping up with clients should become a habit and is part of social engineering where people do more than they think they are capable of doing.”
The bank has a project with the Kedah state government where eight officers are stationed round-the-clock.
“We are not afraid of hard work,” she said. “We also plan retreats so that we can brainstorm and have everybody contribute to the game plan.”
As a niche player, the bank targets at the various pockets of recovery. “Why sit back and allow others to come in? We are equally good and the foreign players need local content,” Zuraidah said. “We should just hang in there, work hard and smart, identify opportunities and make concerted efforts to fortify our markets.”
In advisory services, the bank works with foreign banks. In consultancy services, there is a tie-up with boutique investment houses like Pacific Alliance and Deloitte Touche Ross.
Affin Merchant has mapped out its business strategies for the next three years, which will also see the bank emerge as a regional player, in line with the expansion of clients’ businesses and the challenges brought about by Afta.
Strategic tie-ups in the region are being considered and talks are in an exploratory stage.
“These are for mainly out-of-Malaysia transactions. For instance, we followed our client last year for a listing on the Stock Exchange of Papua New Guinea,” Zuraidah said. Regionally, there is the possibility of dual listings and work, especially on the investment banking side.
She said: “Business these days is beyond frontiers. A lot of things are in the pipeline but they require proper plans and execution. And we have to develop people with the core competencies. That is why the less distractions we have, the better it will be for us to focus on improving our profitability and new areas of business.”
Focusing on the middle corporate market is a strategic move for the bank.
“We want to work with companies that carry out genuine economic activities especially those in the manufacturing and service-based industries. We conduct a lot of site visits to get to know them better. We are in for long haul and believe in developmental work together with clients and colleagues,” she explained, pointing out that the bank had worked with many listed companies in this market segment in several of their corporate exercises.
Last year, some of these companies included Artwright Holdings Bhd, Emico Holdings Bhd, Audrey International (M) Bhd, APL Industries Bhd, Box Pak (Malaysia) Bhd, CN Asia Corp Bhd, Autoair Industries Bhd, Sportma Corp Bhd and Tru-Tech Holdings Bhd.
Zuraidah and her team at Affin Merchant have had their fair share of cloudy days when they moved in and the bank was bogged with non-performing loans and a portfolio to the tune of RM2bil, comprising mainly chunky loans. Provisions of RM160mil have been made.
“We had to be very tenacious, fight against the tide and convince people to stay on with us,” she recalled, not without a sense of humour, now that those days were quite behind her.
Within the bank, she had quickly set up vital divisions in risk management, legal compliance and corporate recovery. Being a former member of the Corporate Debt Restructuring Committee (CDRC) helped in the application of corporate finance abilities.
The moment Zuraidah hit the turnaround in the bank’s profit, she set about building the business especially changing the profile from interest to non-interest income, advisory and provision of investment banking type of facilities. With a lot of repayments being done, the loans portfolio had shrunk to less than RM1bil.
”We are selective now in providing bridging loans and supporting corporate finance activities,” she said.
The change in client profile is now more based on creditworthiness as assessed under a rigorous risk grading framework.
With the change in branding, the bank started to look for institutional work.
“It was multi-tasking for the CEO,” Zuraidah said, adding that in targeting state agencies, she was assuming the stance of a total contrarian.
“I believe there is a market here. When the recovery comes, we will have to see who are the institutions that need turning around expertise.”
Affin Merchant paid interim and final dividend of 10%, double the amount paid in 2001.
“We hope to maintain that this year,” Zuraidah said. The bank has a paid-up capital of RM187.5mil and shareholders’ funds of more than RM300mil.
Building staff is a major preoccupation. About 5% of wages goes to training. The bank takes in fresh graduates, although within its core teams, it has pulled in people from various disciplines such as tax, audit and broking.
“They have to gel as a team and the core has to be very strong,” said Zuraidah. Having emerged from bad times and debt restructuring, the bank is now intense on keeping its staff.
“I always tell them that jumping to another investment bank only means a few hundred ringgit more in monthly wages. They should instead stay and concentrate on their future prospects here,” she said, adding that staff members were sent on overseas delegations and sometimes to follow clients abroad so as to understand them and their businesses better.
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