|
Matthew Vella
MaltaToday can reveal that Investments Minister Austin Gatt is having discussions with representatives and shareholders of the National Bank of Malta in which an Lm8 million compensation package has been offered to the former shareholders who signed off most of their shares under duress to Mintoff’s socialist government thirty years ago.
The National Bank was the precursor to the Bank of Valletta that was forcefully nationalised by a Labour government back in 1974. The discussions were probably triggered by pending court cases lodged by the shareholders against the Government of Malta.
Unless the issue of the former shareholders is cleared the privatisation of Bank of Valletta is likely to incur serious legal hurdles, possibly ending up in the European Court of Justice. Bank of Valletta shares are presently valued at Lm300 million, this newspaper is informed.
Gatt has insisted upon complete secrecy throughout informal talks with the shareholders’ representatives, although details of the talks have been leaked to other sections of the press following this newspaper’s investigations.
At a 1973 nominal value of Lm100 for every share, the offer is a pittance compared to the market value of the bank when it was taken over by the government and nationalised into the Bank of Valletta.
Shareholder Louis Apap Bologna and the president of the Chamber of Commerce, would not confirm nor deny the offer of Lm8 million. He simply told MaltaToday that informal discussions were still going on with the government.
The offer would appear to be a final attempt at removing the Bank of Valletta’s most notorious skeleton in its closet, a major setback to further privatisation efforts for the bank, still haunted by the National Bank of Malta scandal take-over thirty years on.
MaltaToday is informed the government is willing to pay an amount of interest that will not accede double the value of the capital in accordance with duplo rules on interest.
At the end of 1973, according to a report by Curmi and Mallia stockbrokers, the National Bank’s net asset value after the run was equivalent to Lm2,857,445, or Lm292 per share.
The National Bank of Malta was formed in January 1946 with the amalgamation of the Anglo-Maltese Bank and the Bank of Malta, which had been established since the early 1800s. In 1948, the bank incorporated one of the oldest local private banks, Scicluna’s Bank, created in 1830 by Marquis Emmanuel Scicluna. In 1969, the National Bank of Malta acquired 90 per cent of Tagliaferro Bank Ltd.
Around 350 shareholders, notably the larger part of Malta’s nobility, lost their shares after a run on the bank’s deposits in December 1973 forced them to sign off their shares under threats by former Labour Prime Minister Dom Mintoff.
Millions were allegedly withdrawn within days from the National Bank when its directors were summoned to meet the Prime Minister, who demanded they transfer the bank to the government to restore depositors’ confidence.
The shareholders are still in court today, 30 years after the events of 1973, in a bid to reclaim a just compensation.
According to the National Bank of Malta shareholders, Mintoff had refused to allow the Bank to borrow bridging finance from other banks such as the Midland Bank, the NatWest, or Barclay’s Bank.
According to court testimonies, Mintoff said the share transfer would occur “naturally without compensation”. Mintoff said that if the directors refused this offer, he would remove the limited liability of the banks’ shareholders, extending it beyond the bank’s capital to their personal assets, and that he would withdraw the four million pounds in parastatal funds which were deposited at the bank.
Court evidence by former director and shareholder Philip Attard Montalto states that Mintoff said all Malta would know the bank had gone bankrupt when he would state on television that ‘he was getting out of there and taking his case with him’, threatening to remove all parastatal companies’ deposits.
“I’ll either pass a law to appoint a Council of Administration to take care of the banking group’s assets and liabilities, or else I will pass a law to remove the limited liability of all the shareholders… I know this is against the Constitution, I don’t give a damn about the Constitution, not I wrote it, I don’t give a damn about the judges and anybody.” (Naf li din hija kontra l-Kostituzzjoni, jiena nitnejjek mill-Kostituzzjoni, mhux jien ghamiltha, nitnejjek mill-Imhallfin u minn kullhadd.”)
Mintoff’s threats prompted a telephone campaign to all the NBM shareholders to collect their signatures for the share transfers, fearing that the government would take their personal belongings from their homes. Court marshals started knocking at the doors of the shareholders, right up to the early hours of the morning.
The law authorising the transfer of the National Bank of Malta to a Council of Administration was passed in record time, with little opposition from the Nationalist Party, as well as one MP who was also a minor shareholder, Alexander Cachia Zammit.
According to the former shareholders, Lm1.3 million was withdrawn by the Council when it first took power of the bank, sending the total figure of money withdrawn up to Lm2.5 million, putting the bank into further, justifiable crisis.
However, no documented statistics issued by the Council of Administration or the government or the Central Bank of Malta give the exact amount that was withdrawn during the run. At the end of 1973, the Council’s annual report, audited by Deloitte & Touche, claimed the amount withdrawn had totalled Lm6,460,00, in total 15 per cent of the bank’s Lm43 million deposit base.
matthew@newsworksltd.com
|
