Passport fund appoints John Bonello, Paul Abela to Lombard Bank board

The government has appointed its first two directors on the board of Lombard Bank, in the name of its chief institutional shareholder, the National Development & Social Fund – the Maltese posterity fund.

Former PN international secretary John Bonello, who in 2017 exhorted Labour voters to re-elect Joseph Muscat, and Chamber of SMEs president Paul Abela, will represent the NDSF on Lombard Bank.

The National Development and Social Fund, whose revenues are generated by the sale of Maltese citizenship, holds 49.01% of the bank’s shares since acquiring them in a bid to retain domestic control after the exit of Lombard’s Cypriot shareholders.

In 2022 Lombard’s board failed to pass a resolution to issue new ordinary shares and increase its share capital, after the NDSF voted against. The NDSF said Lombard’s plan to increase share capital, in the process diluting current shareholders’ equity, had not been accompanied by a presentation to shareholders, including the reasons for the issue.

“The NDSF believes the Bank’s board should not have the authorisation to issue and allot shares in the bank up to the authorised share capital of the bank with such rights, restrictions and terms and conditions as the board of directors, in their absolute discretion, deem fit,” said CEO Raymond Ellul at the time.

At the time the NDSF did not yet have a member on the board of directors.

The NDSF will now be present for future discussions with the bank to ensure its proposal for a new share issue be approved by a minimum of 75% of the shareholders to pass.

The NDSF acquired a 49% equity in the private Lombard Bank in 2018. The investment, valued at just over €51 million, was intended to facilitate the exit of the now-defunct Cyprus Popular Bank. The move was a measure to safeguard the domestic position of Lombard Bank, which is the owner of Malta’s major postal service, Maltapost.

The NDSF’s investment was intended to be a temporary one, however, since then the fund has not divested itself of its shareholding.

Over 1,200 shareholders, and investment funds, hold the remaining shares in Lombard Bank, which besides the NDSF, include Virtu Holdings (9.89%), LifeStar Insurance (5.59%) and First Gemini p.l.c. (5.31%).

Lombard, which is run by CEO Joseph Said, has a controlling 71.5% stake in Redbox, the owner of postal operator Maltapost plc.