Challenging the commercial banking oligopolistic market situation in Malta : an assessment of an emerging bank and its long-term sustainability

Abstract

Commercial banking is a very important activity within a global economy. Banks can operate in an Oligopolistic market condition where only few of them compete. Driven by past research on this matter, the author identified a gap in the literature as very few is known on how local commercial banks manage to survive such circumstances. This background sets the scene of a qualitativebased study having HSBC, BOV, APS and Lombard banks dominating the market in Malta whilst Banif, an emerging bank, is competing for its long-term sustainability. The thesis investigates and analyses why this is happening and attempts to determine what factors contribute to the emerging bank's long-term sustainability. The researcher chose the field research methods to investigate to what extent theories match the situation in Malta. The research is exploratory based on a non-probability/critical case sample size. Data was collected by undertaking one-to-one interviews with banking officials, MFSA representative and a local economist, and the justification of this approach is explained. The study reveals that although theorists claim that global commercial banking is shifting from a conservative to a non-traditional approach, banks operating in Malta are following this route rather mildly. The research concludes that although HSBC may be considered as a leader in this transformation process, closely followed by BOV, Banif is managing to gain some market share. An element of disparity is in place between academics and practice in Malta in terms of how banks are scanning their competitors agreeing with other theorists stating how extremely difficult it is for banks to continuously assess customer needs. The study established that an oligopolistic market condition is in place in Malta. This is accommodating the banks' strategies on market share and their profitability, and Banif may be exploiting this situation. HSBC, closely followed by BOV, will probably exploit the wealth management sales potential in the years to come whilst Banif can survive in the long-term as far as operating costs are managed diligently.