RS2 bids for HSBC Malta

German fintech company RS2 has submitted a bid for HSBC Malta, promising to revive the Mid-Med Bank name and branding, Times of Malta has learnt.

When contacted, the company confirmed it had “been selected to submit a bid for HSBC Malta”.

RS2, the fourth known bidder for the bank, is considered a frontrunner in the race.

APS, which emerged as an early favourite when HSBC announced its possible departure last September, dropped out of the race last week, leaving Hungarian bank OTP and a local consortium of businesses in the running.

The company is well known across the business world as a global provider of payment processing services, listing several renowned banks and financial institutions among its clients. These include payment service providers such as Worldpay and SumUp, and banks such as Swedbank, Banca Intesa and Barclays.

The latter is one of the group’s main shareholders, believed to have a roughly 18% stake in the group. RS2’s bid would mark the British banking giant’s return by stealth to Malta, after it last exited the country over a decade ago.

e-Money licence

RS2 holds an e-money licence issued by Germany’s financial regulator, BaFin, but would need to obtain a full banking licence to complete a takeover.

This would not be the company’s first foray into the Maltese market. RS2 has operated a local subsidiary for three decades, employing around 200 people between its Mosta headquarters and Gozo office. It is listed on the Malta Stock Exchange but has seen its share price plummet in recent years, dropping from a high of €2.40 in July 2020 to €0.38 this month. In its latest financial statements, RS2’s Maltese subsidiary reported total revenues of €19.1m and a gross profit of €5.4m in the first half of 2024. However, the Maltese subsidiary is not believed to be directly involved in the bid, which is being driven by the group’s parent company in Germany.

The group, through its various subsidiaries, also has offices in the USA, the Philippines and Jordan. How it plans to finance the acquisition of HSBC Malta, which reported pre-tax profits of €154.5m last year, remains unclear. But a company spokesperson brushed aside concerns, insisting that “the financing for a competitive bid is already in place”.

Mid-Med brand

If it succeeds, the company says it plans to adopt the much-beloved Mid-Med Bank name, bringing back the now-defunct bank’s branding, with its distinctive blue and white colour palette.

A spokesperson for the company said it had “secured the Mid-Med brand and intends to revive it as it represents the revival of a homegrown champion with European aspirations”.

Mid-Med Bank branches were a common sight across Maltese towns until the bank’s name and branding were phased out after HSBC took over the bank in late 1999. Last year, days after HSBC announced its possible exit, the Mid-Med’s iconic sailing boat-themed logo reappeared on a cryptic website brandishing the bank’s name. It is not known whether this website is somehow linked to RS2’s proposed takeover.

The home page of a Mid-Med website that appeared several months ago. It's not clear who is behind it.

Aside from the Mid-Med branding, the company says it plans to piggyback on HSBC’s existing infrastructure and workforce.

“Our business plan commits to retaining all employees, branch and ATM infrastructure,” the spokesperson said when questioned over the prospect of job redundancies. “Our aim is to increase and not decrease operations,” they insisted.

Ultimately, the company says, it “will cover the banking space covered by HSBC Malta in all spheres”, hinting that it plans to continue HSBC’s focus on retail and commercial banking.

Regulatory hurdles

However, as only the second known bid not made by a fully licensed bank, RS2’s proposal could face several regulatory hurdles.

The winning bid would need to be greenlit by both local and European regulators, namely the Malta Financial Services Authority and the European Central Bank respectively, before being formally approved.

Banking experts previously told Times of Malta that regulators are seldom keen on takeover bids from bidders that do not already operate as a bank. However, the company told Times of Malta it had already broached the subject with the MFSA and was optimistic that the group will be able to persuade regulators to greenlight its bid.

“During our first meeting with the MFSA, where we informed them of our bid, the regulator gave positive feedback. We assume that the Maltese regulator will be in touch with its German counterpart,” the spokesperson said.