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Matthew Vella
Shareholders of the former National Bank of Malta will meet in December to discuss whether to accept an Lm8 million settlement from government, or push further for higher reparations.
Some 300 shareholders can be expected to vote on whether to demand as much as Lm18 million from government, 31 years since their bank was forcefully nationalised by an act of parliament. Shareholders signed off their shares under duress to Dom Mintoff’s Labour government, although how many had relinquished their shares has never been established.
The bank was later nationalised into the Bank of Valletta, today worth in excess of Lm300 million.
Pushing for a final privatisation sweep of the bank, government is attempting to rid it of its most notorious skeleton in the closet. Austin Gatt’s ministry is piloting the settlement, with lawyers Max Ganado and Ian Refalo mediating between the shareholders and government.
With court cases ongoing for the last three decades, the out-of-court settlement is as yet the most concrete act of recognition from the government that National Bank of Malta shareholders are entitled to compensation for being forcefully made to sign off their shares.
But with a market value of Lm300 per share at the time of the 1974 take-over, government’s Lm8 million offer falls short of equitable redress.
Major shareholders and heirs of the bank’s founders are expected to put their weight behind a higher settlement. Together, families of the noble Sciclunas and Sant Fourniers, as well as the Cassar Torregianis and Gollchers, comprise over 50 per cent of the shareholders.
Admittance to the meeting will only be granted to shareholders who present certified copies of their shares or in the case of successors, a notarial declaration stating the root of title as well as certified copies of their shares.
They will vote on their plan of action at Palazzo Parisio in Naxxar, the stately home built by Grand Master Manoel de Vilhena, later purchased by Marquis Giuseppe Scicluna in 1898.
His uncle Emanuele founded the Sciclunas Bank in 1830, later incorporated into the National Bank of Malta in 1948. In 1969, the National Bank acquired Tagliaferro Bank.
At the apex of its profitability in December 1973, millions were withdrawn from the National Bank in a run on its cash deposits. Within a week, Prime Minister Dom Mintoff demanded that shareholders sign off their shares to the government, refusing to allow the Central Bank act as the “lender of last resort” forcing the National Bank to its knees.
Shareholders have claimed in court that Mintoff wanted the share transfer to occur “naturally without compensation”, threatening to remove shareholders’ limited liability by extending it to their personal assets, and to withdraw Lm4 million in government deposits from the bank.
In court, the bank’s directors have claimed Mintoff was categorical about his actions when he met them at Castille in December 1973, alleged to have said: “I know this is against the Constitution, I don’t give a damn about the Constitution… I didn’t write it… I don’t give a damn about the judges or anybody.” (Naf li din hija kontra l-Kostituzzjoni, jiena nitnejjek mill-Kostituzzjoni, mhux jien ghamiltha, nitnejjek mill-Imhallfin u minn kullhadd.”)
Fearing the government would seize their personal possession, shareholders signed off their shares without as much of a whimper from the Nationalist opposition of the day.
The National Bank was the island’s main lender to the construction and tourism industry. Its demise benefited industry magnates whose outstanding loans were practically devalued by government, writing off some Lm6 million in loans as “bad debts”.
The accounting exercise turned the profitable bank into an overnight bankrupt institution, Lm253,000 in the red.
Within a year however, the nationalised Bank of Valletta generated a turnaround with Lm1 million in profits from what had been declared a “bankrupt” bank – in just three years, BOV also managed to recover the “bad debts”.
matthew@newsworksltd.com
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