I have a brilliant idea for Joseph Muscat and Edward Scicluna: why don’t you steal that bank all over again?
The latest news from the Malta Taghna Lkoll front has the government dictating to a bank which it does not own, and which it does not control, what to do with its own money and that of its shareholders:
Investors in Bank of Valletta’s La Valette multi-manager property fund have been told that the new government will be calling for the bank to give them full compensation for the money lost in the fund by Bank of Valletta’s investment arm Valletta Fund Management.
No wonder they replaced the former chairman without telling him, or even informing the bank itself, which means that the requisite company announcement was not issued through the Stock Exchange and the Malta Financial Services Authority was not informed.
The government chooses and appoints Bank of Valletta’s chairman but it has only one other director on the board.
Regardless of the merits of the La Valette case (and I am not competent to enter into them), the fact remains that the government cannot instruct Bank of Valletta, exert pressure on it, or interfere in this manner.
If it carries on, the other shareholders should object immediately by means of a judicial protest.
We have already had the finance minister saying last week on TVAM that the banks should not be too generous with their dividends so as to increase their capital base: mentalita ta’ sidu Dom Mintoff.
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It seems that the finance minister is unaware that BOV (as also HSBC) has been paying part of its annual dividends in the form of bonus shares by the capitalization of reserves thus increasing capital base.
As regards La Valette case, so MFSA has been bypassed so as to pay Finco’s pound of flesh.
Well, being made chairman of an obscure government property holding company was hardly reward enough now was it?
What would Paul Bonello say?
Daphne I do not think that the shareholders can object through a judicial protest in this case. The reason being that the La Vallette fund has been found in breach of mis-selling and the respective Authority had imposed a substantial fine with this respect.
Therefore the MFSA which is a regulatory authority as opposed to an executive authority, has not been bypassed.
With regards to pressure from the Government, to re-inburse investors: the likelihood is that once the government is in position to appoint a board of directors on the BOV seat, it has the authority to exert pressure or make demands of this sort. In any case, dividend payments to shareholders are not compulsory.
A public company has a right to retain its profits if it wants to strengthen its capital base or re-plough its profits into future capital investments. The absence of dividends does not necessarily mean a depletion in share value, as long as the capital gains on its shares are consistent.
On the other hand. companies may opt to reduce their dividend per share but retain a proportionate dividend payout in line with their normal payout ratios.
My fear is that the BOV will be forced to finance certain government projects like the new power station behind our backs. Is this possible?
Every single day, more into the red depths we go.
Is that a line from ‘120 Days of Sodom’ or the first four months of Labour? Not that there’s much difference, for that matter.
Perhaps Edward Scicluna and Joseph Muscat should open a new bank to play around with.
Since the evil Nationalists managed to safeguard (partially in the case of BOV) the largest commercial hands from the troubling overreach of an amateur government, the brilliant minister of Finance could set up a new bank where the gullible Maltese would put in their savings, buy bonds, or invest in it by buying minority shares.
Then the Minister could do as he pleases with his new infant bank.
“Then the Minister could do as he pleases with his new infant bank.”
He might consider doing a bail-in, for instance. And hoover the depositors accounts to the credit of the government’s.
Beda jberraq!
Din hija l-bidla?
Se jerghu jabbuzaw bil-vot tal-injorant. Ezatt kif kien jghamel Mintoff.
Imma disgrazzjatament dan hu il-Labour u ma jinbidel u jitghallem qatt. Mohh certu Maltin s’hemm iwassal.