Vanessa Macdonald caught up with the new CEO at HSBC Bank Malta, Andrew Beane, to see whether he will tweak the bank’s direction taken by his predecessor Mark Watkinson over the past four years.

Your cost-to-income ratio was 55.6 per cent, up from 43.8 per cent in 2011. What can you do to improve this?

We have seen pressure on revenue and cost at the same time.

There has been a permanent structural change to banking – an understandable, post-crisis reaction of governments, regulators and society at large – including the requirement for banks to hold more capital, and regulatory changes which increased the costs of running a bank.

We have seen record low interest rates, which are likely to continue for the foreseeable future, which naturally puts pressure on bank earnings across the board – as well as a reduction in savings’ deposits rates for customers.

I take the view that this is just a change in the operating environment and you simply have to adapt to it. The focus for us is not just on cost but also on revenue – and how to grow the business. We are a systemically important bank so we have to serve society well and responsibly, supporting Maltese individuals and businesses to succeed.

The Maltese economy has done very well and much better than many of the other member states in the eurozone; confidence is high and people are investing.

On the cost side, there are two elements. There is a need to reduce costs as customers use different banking channels and we need to invest in new areas, like compliance.

We do not have a target for the precise cost-to-income ratio that we need to achieve: we need to see positive growth on revenue and some control and management of costs, as well as a perspective of what our capital requirements are going to be. That will give us a sustainable, profitable and safe bank for shareholders and for the country.

We have known for some time that HSBC Group wanted to cut 50,000 staff across the world. Is the early retirement scheme part of this, or one generated by local circumstances?

The structure that group chief executive Stuart Gulliver set out reflects the trends of exciting growth opportunities balanced by structural costs and capital pressures.

Those pressures exist here in Malta as they do in many countries. So what we are doing is absolutely aligned with the group strategy, but it is equally on a standalone basis.

There is no target, no number of staff that we need to reduce. This is very important and I want to be very clear that this is the spirit of a voluntary programme.

It is about reducing costs, not people. Clearly there is a link between them but the focus is cost management. Half our costs at the bank are related to staff – €52 million in 2014.

Most of the customers I met in my first few weeks here are focused on managing costs in a disciplined way. We need to do the same.

Our sources insist that the number is in the region of 400 – which seems very high in view of your headcount!

There is clearly a perception in parts of the community that HSBC is not sufficiently open for business

Being responsible for the programme, I can assure you that there is no number. Of course I have an internal view of what it is likely to be but it is nothing like that. The programme closed last Friday so any numbers are frankly speculative as we have not had the time to go through the applications yet. We have to see who was interested to take it up and consider what cost reduction is possible.

When we do know the numbers, we will be very happy to talk about them.

You say that you want to help customers seeking growth but it is an open secret in Malta that HSBC is very risk averse…

Any bank has its own risk appetite. That is part of running a sustainable business for the long term.

There is clearly a perception in parts of the community that HSBC is not sufficiently open for business. Some of the perception has probably crept in internally and that may have been projected to customers as well.

Our job – and this is our duty to society not just our strategy – is to get out there and facilitate. That does not mean that we can support every loan proposal that comes our way – some will not fit our risk appetite and will not be a good credit decision.

But my broad message is that we want to grow the bank, support the economy and support customers. I had all the senior management team here this week and said this to them very clearly.

HSBC already closed its share shop but has now ceased its self-service offering. Wasn’t this money for old rope?

To be clear, we are still offering new IPOs and Malta Government Stock. We need to focus on a few things that we can do really well.

We do not think that this business – a very small part of what we do – could be done profitably and effectively.

We need to recognise changes to the regulatory environment. For example, the standards of advice we must give on the provision of sophisticated products are now much higher than they used to be in the past.

I take the point that we provided services in the past that we cannot provide in the future but the substance of our business and all the core products will be provided.

How long before you actually start closing branches?

We will naturally review our comprehensive distribution network from time to time, based on customer preference and demands.

But we do not have a branch closure programme and our business is based on following our customers and meeting their needs. As long as we have customer demand that we can service profitably we will continue to offer them.

There are changes in the way that customers are using branches and many manual transactions have migrated to electronic channels. Equally we have invested in our wealth management business so we are now using some of that physical space to provide more advisory services.

If you think longer term, we can provide better services to customers and have more quality conversations with them about things that are really important to them in their lives, and use our resources to do that rather than transactions that can be done efficiently through other processes.

‘We’re having productive discussions’

The collective agreement expired in 2013 and was quite a bone of contention. What is happening now?

Let us start from the principle that the purpose of the bank is to serve customers and businesses. It is the quality of engagement of your people that largely defines the service you can provide.

I recognise that the extended uncertainty that existed around the collective agreement is not the environment in which we would like to run our business.

I am doing my best to sign a collective agreement as soon as possible. That is what I have committed to the staff and that is what I have committed to the union.

I have undertaken to publish all the promotions in the bank as from next year, which will help people understand some of the changes taking place

I have built a very positive relationship with the Malta Union of Bank Employees and I am working very closely with William Portelli and his team. In any negotiation there can be different perspectives – that is quite healthy – but these need to be handled in the right spirit.

The spirit of the negotiations is positive and we are having good and productive discussions. The core purpose should be to have a competitive and fair, people-oriented workplace and culture. We will do our best to resolve this in the best interest of our people from a commercial perspective, certainly, but also a fair one.

There were quite a few people who lamented that their career prospects were being blocked by expatriate appointments. Unfortunately the perception is that they were here because they were no longer needed somewhere else…

I believe very passionately that you have to have a meritocratic culture – in both perception and reality. We are very fortunate to form part of a large global organisation and we should have a relatively small number of highly talented expatriates that bring the best of the group’s expertise here.

I don’t think it is necessarily about expatriates. We only have a dozen or so – and equally we have a number of very talented Maltese colleagues working overseas.

We have to ensure that the culture and career process can support everyone and help them flourish. I have undertaken to publish all the promotions in the bank as from next year, which will help people understand some of the changes taking place.

Similarly, in discussion with MUBE, I published for our staff the full engagement survey that we run every two years, which has good things and things that we can do better. The starting point has to be that you are open, honest and transparent, and you should have confidence and trust in that – whether you are in the most junior or most senior position.

I am meeting two to three employees a week on a one-on-one basis at the moment across the enterprise to listen.

You are 36: is that an issue?

I have been fortunate in my career to date to have held a number of senior roles. I was on the executive and risk committees of our parent bank before this and have held other senior positions all over the place.

I think it is an opportunity to bring a new perspective to the executive table. That to me is the essence of diversity – diversity of thought, gender, age and so on. I do have different generational perspectives; I intend to use that as a force for good.

I am doing this interview in the Qormi operations centre rather than in Valletta. What is that about?

Symbolism is really important in leadership. It was clear to me that while Valletta remains extremely important for the governance of the bank and engagement with some of our political and most senior customer stakeholders, our team is here.

I needed to be connected to them so we are camping out here four days a week here. It is for others to say, but I hope that it is being received positively and certainly it enables all those informal conversations to take place.

This is an important part of listening which I think is a key tenet of any leadership job. The tendency is always to talk but it is more important to listen.