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Nemea says it will contest MFSA request to withdraw banking licence

Online-only bank under controllership of PWC says it will challenge request to ECB to remove banking licence

Matthew Vella
24 January 2017, 11:59am
The online-only bank Nemea taken under the controllership of PricewaterhouseCoopers has said it disagrees with the decision by the Malta Financial Services Authority to ask the European Central Bank to withdraw its licence.

Nemea plc has appealed the MFSA’s decisions to appoint a competent person and to impose a deposit withdrawal limit, amongst others.

Nemea was placed under the control of PWC as a ‘competent person’ in April 2016 to ensure the proper protection of depositors and bank’s clients after the ECB flagged “serious regulatory concerns” inside the bank.

“Nemea categorically refutes the MFSA’s contention that the Bank is affected by regulatory shortcomings. Nemea also contests the MFSA’s statement that to date no tangible progress has been registered by the bank’s shareholders to fulfill regulatory requirements. The bank’s shareholders wish to put on record that they have always collaborated in utmost good faith with the MFSA, that the Bank is meeting and has met, at all times, its capital and other regulatory requirements to a material extent, and that the Bank is fully viable and able to resume its normal profitable operations,” the bank said.

Nemea is contesting the proposal by the MFSA to the ECB to withdraw their licence saying it is without any legal or factual basis. “Should any regulatory action as has been proposed by the MFSA be taken against the Bank, such action will be vigorously

and robustly challenged before the appropriate judicial fora at both the Maltese and EU levels.”

The MFSA said that discussions with the shareholders to ensure the necessary action had produced no tangible progress. “Given that this situation cannot be sustained indefinitely without undue detriment to depositors, the Authority has now decided to propose to the ECB the withdrawal of the licence granted to the Bank. This measure has been taken by the Authority in the interests of the depositors of the Bank,” the MFSA said.

Nemea said it was committed to restoring normal operations in the shortest time possible in the interest of depositors and all stakeholders.

Pending the ECB’s final decision on the license withdrawal, a prohibition of the withdrawal of deposits has been put in place with immediate effect.

Nemea specialised in providing banking and investment services to individuals, businesses, institutions and high net worth individuals across the European economic area.

As an online-only bank Nemea could afford to operate with lower costs and overheads than traditional banks’ relative cost base, and earn income by generating interest, fees and commissions, and financial income. Clients’ deposits were invested by the bank in loans, deposits, other fixed income instruments and other low risk securities.

The bank’s directors include former prime minister Lawrence Gonzi and financier Joseph F.X. Zahra, recently appointed to head a special finance commission for the Vatican by Pope Francis. The other directors are Finnish co-founders and co-chairmen Mika Lehto and Heikki Niemelä.

Nemea Bank PLC is in turn owned by Nemea PLC, itself owned by Nevestor SA of Belgium (40%) and Ninovan Ltd and Shilmore Ltd of Cyprus (30% each). The bank is ultimately jointly owned by its founders Heikki Niemelä and Mika Lehto.

Matthew Vella is executive editor at MaltaToday.
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