So, with the alleged illiquidity and insolvency of NBM, under what motivation did the (UK) Midland Bank declare itself ready to pitch in with a suitable loan to enable NBM to ride out the uncalled for run triggered by Mintoff – even while the Central Bank was considering it proper to fail in its primary function and concentrating on looking the other way? and why did Mintoff, who you say was so concerned in assuring security of depositors, consider it opportune to block that inter-bank transaction that would have immediately defused the artificially-generated crisis?

What with closely rubbing shoulders with senior bankers at Barclays our 22-year old AM must surely have been fully conversant with ongoing inter-bank support between Barclays and NBM to iron out possibly adverse effects of the above-normal withdrawals/demands that are occasionally prone to occur?

Mintoff and his cabinet cronies, and those all the way down to the most minor party officials spent a very great part of the 70’s and early 80’s citing Mintoff’s achievements in setting up Sea Malta, Air Malta, Bank of Valletta, Mid-Med Bank. Truth is, Mintoff had simply taken over stable and well-established businesses at gun-point by resorting to dubious measures [or as that other Alfred said recently, by using his ‘power of incumbency’]. Of these:

Sea Malta never managed to attain viability, even after other established shipping lines that had served Malta well had been compelled to cease such services.

ditto Air Malta. Its predecessor Malta Airways, and upon whose ground equipment and infrastructure forcibly taken over by Labour government Air Malta was founded, had had its operating licence terminated precisely at the time when it had bought options on 3 of the then newly introduced Trident aircraft and the cancellation of which purchase involved Malta Airways in a significant financial loss. In its stead, Air Malta trundled in with obsolescent, fuel-guzzling, Boeings for which Air Pakistan had no further use.

Mid-Med Bank – based on the assets and goodwill of Barclays DCO who had been subjected by Labour government to an offer that one cannot refuse – had, as one of its main functions, acted as a channel for funnelling millions of Malta Liri from depositor funds to keep the Dockyard and other government-hatched lame ducks artificially alive. As AM must be well aware, these worthless loans were not taken over by HSBC and Maltese tax-payers have had to make good for these wasted funds that,including unpaid PAYE and NI dues converted to ‘loans’ at tax-payer expense, in the case of Drydocks alone account for some Lm300,000,000 or 30% odd of the national debt.

One other significant use of all the above was as a repository for the vote-catching thousands of non-jobs created by the Labour government in the lead-up to the 1987 general election – and the financial consequences of which still burden the tax-payer.

Bank of Valletta, based on the ‘illiquid and insolvent’ NBM, in contrast, rapidly progressed and sustained profitability, even despite periods of mis-management already referred to in other related posts. For, in truth, NBM insolvency was only a fiction drawn up to justify Mintoffian whims.

The accounts as drawn up in the aftermath of the Mintoff- triggered run on the bank used some very odd accounting practices, e.g. the bank head office at Republic Street, was valued at its initial £(Lm) 11,000 purchase price as a bomb site in the late 40’s, then depreciated over 25 years with no cognisance whatsoever of the building eventually erected on the site – this at a time when a one-room shop a few metres away was leased out at a premium of Lm11,000 over and above a substantial daily rental. This strange form of asset valuation would have been used for the many branch offices owned by NBM island-wide. So far as is known those initial accounts were never subjected to a proper and in-depth audit.

What is never refered to is the number of businesses and valuable jobs in the private sector that were lost as as result of the forcible take-over of the NBM, and the many lives that were ruined in the process.

Twenty years on [since 1987] we tax-payers are still footing the bill for the consequences of Mintoff’s blinkered and luddite ideology, and of the incompetence of his period of governance and those of his chosen successor KMB, …and so will the next two or three generations down the line.

Yes, indeed, Malta has a lot to thank Mintoff and his contemporary parliamentary cronies for.

Meanwhile, government has an ongoing obligation to make good to NBM shareholders for the abuse they have been subjected to and to restitute the financial losses they endured by paying out a sum equivalent to a true and fair assessment of the asset value at time of NBM takeover with accrued interest at appropriate rate.

By continually dodging fair settlement of the NBM issue, government is effectively aligning itself with the abuses of the past.

Extracted from:

http://user.orbit.net.mt/fournier/MNhistory.htm

Readers may reach their own conclusions.

“U issa ha’ mmur inbul” (said “waqt li kien qed jiftah il-kuzakk”.)

Use your imagination as to who said it. It was said to a group of true gentlemen, by one who certainly never was one himself.

Wasn’t the central bank unjustifiably prevented from doing its duty in the case of the National Bank?

Wasn’t that a deliberate act meant to aggravate, rather than ease, depositors’ panic?

Don’t all banks use deposits to provide credit facilities to clients, including some of the depositors themselves, which means that no bank ever holds enough cash to honour all deposits simultaneously?

Doesn’t that mean that trust is fundamental to a stable banking system?

Isn’t that the reason that a central bank backs up commercial banks by acting as a lender of last resort?

Isn’t that why Malta’s central bank was prevented from doing its duty in the case of the National Bank?

Wasn’t Mintoff the person behind the decision to prevent the cetnral bank from acting as a lender of last resort?

Was he genuinely acting in the interests of depositors, when some of those depositors were shareholders who were threatened with seizure of all their assets unless they ceded their National Bank shares ‘voluntarily’, and employees of whom he said “nigi nitnejjek – jidhlu fil-pijunieri” when someone asked what would become of them if the bank were taken over?

Is Mintoff’s ‘conversion’ of the National Bank to Bank of Valletta really so admirable, after all?

@ Ray Borg
I picked upon these two mayors because they influenced the dlegates through their cheap oratory without declaring their conflict of interest.

I am not exactly known for hiding my critisism, am I? Hopefully I can have an opportunity soon to discuss my misgivings directly with the two gentlemen.