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Government’s decision earlier this month to take off its 25% shareholding in Bank of Valletta off the market after putting it up for sale along with the Capitalia share of 15% in BOV, has landed the state an additional income of nearly Lm2 million after BOV declared record profits.
Two years ago the government kicked off the process to sell off its shareholding in BOV by signing a memorandum of understanding with the other single large shareholder Banco di Sicilia, which has since passed on to Capitalia.
Both parties appointed Rothschild as their financial advisor to seek prospective buyers for their joint 40% stake. However, earlier this month, just when the budget for 2007 was being prepared, the government informed the bank it will no longer be seeking buyers for its shareholding.
Bank of Valletta had just completed its financial year-end in September and immediately issued a company announcement to notify the market with this development.
Within a fortnight, the government presented its budget for next year as well as its revised estimates for 2006. Last Friday, the board of directors of BOV met and approved the full year results and decided to recommend to the shareholders a final gross dividend of 11c per share, which after deducting tax, will net each share with a dividend of 7c15.
Working out on the number of shares which the Government has through its 25% shareholding in the bank, it will receive a dividend of Lm2 million.
The shareholders will be voting for the dividend in December and will receive the cash before the year-end.
The exchequer will surely welcome this income boost, a propitious earner since the government has not divested itself of its equity stake in BOV.
The government will also start off fiscal year 2007 still owning its stake in BOV which at Friday’s closing market price was valued at Lm112 million. This is equivalent to the budget deficits for this year and the next.
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