The below refers to my post of this morning about the Bank of Valletta, linked here. As is the practice on this blog comments on a post which carries someone’s right of reply are not carried.

Mr Delia

Reference is made to the article “Pilatus. Sata. Now BOV” published on your blog on 21 November. Pursuant to the bank’s right of reply you are hereby solicited to publish the following with the same prominence as that accorded to your original article.

The article above referred to rides on the back of a Reuters report, which in turn quotes a confidential ECB report commenting on various flaws which it identified in BOV’s internal control framework back in 2018.

This is nothing but the recycling of old news. Your readers may recall the “leaking” last August of a letter addressed by MFSA to BOV, on precisely the same subject. The Bank had, on that occasion and on a number of others, informed the market of the transformation programme that it is carrying out to address all of these issues in a robust and determined manner. The programme is currently being implemented in agreement with and under the oversight of the Bank’s various regulators, and with the assistance of two global consultancy firms.

The transformation programme includes a comprehensive de-risking exercise, by virtue of which the Bank is exiting from, and downsizing, higher risk business areas such as the international corporate and personal accounts portfolio. It is also reviewing and remediating all customer relationships, whether local or international. Customers that cannot demonstrate a nexus with Malta will no longer be eligible to hold an account with BOV.

None of these remedial actions seem to have come to the attention of your blog. Instead you choose to adopt a highly dramatic tone (“the threat of a meltdown at Malta’s largest bank”) which is more conducive to creating alarm rather than financial stability. The programme being conducted by BOV is par for the course in the current scene within the international banking industry. Regulatory discipline on financial institutions is an everyday occurrence. De-risking is taking place across the financial world.

A particular issue raised by the article merits a specific reply, even though it is, once again, old news, to which the Bank has already comprehensively responded. It relates to the €450 million which the Government, you allege “forced” BOV to lend to Electrogas. This loan, originally made by BOV, was always granted at arm’s length and on terms which reflected market terms.  In fact it was subsequently refinanced by a syndicate of banks, to which BOV only contributed 17%. The rest of the loan was snapped up by international institutions such as Societe Generale, BNP Paribas, KfW and HSBC.

BOV remains a strong, safe and profitable institution. Its capital and liquidity ratios, which are benchmark measures of the strength of banks, are much higher than EU averages. It is supervised by the European Central Bank, the MFSA and the FIAU. The transformation programme, which addresses the weaknesses pointed out by the ECB report, is aimed to take BOV to the next level of its development in line with international best practice. It would be obliging if BOV were allowed to complete its programme in all tranquillity and without undue drama.

Kind regards

Charles Azzopardi
PR & Marketing