I will not walk away | Roderick Chalmers

“In normal circumstances, should this have happened?” Roderick Chalmers was asked by MaltaToday, referring to the collapse of the property fund where Bank of Valletta served as a custodian. The collapse of the fund led to many local investors losing out on their investments.

Chalmers referred to the unprecedented market conditions two years ago that were not only unique to Bank of Valletta but with many other institutions. 

“The crisis of 2008 was one of the greatest market falls since the great depression and it left large investment losses. It was predominantly linked to the huge market collapse. 

“Before the fall, nobody questioned this property fund.”

He recognised that there was a very vocal minority that represented around 10% of all the investors in the property fund.

“We have a disagreement and we and the MFSA are taking a different view on the gearing issue.”

Chalmers said that nonetheless, the Bank wanted to resolve the issue in a fair and equitable manner.

“We came up with an offer. In computing it, we took account of the difference of opinion since confirmed by MFSA. Our offer is 75c per share and fully prices in the adverse MFSA finding and compensates investors for the underperformance of the fund. And it is not a take it or leave it – everybody is free to choose.”

Chalmers said that the bank has communicated with the “quieter” majority – they say that as things stand today, the cash value of the property fund shares is 28c.

“We are offering 75c per share if they redeem their share until the 30 June. Those who do not want to do this need not, and their rights will be unaffected. I can confirm that the number of people who have accepted the banks offer at this point is significantly much times higher than the 10% who are protesting.

“We would be fools not to have learnt lessons – there is not an institution or a regulator that has not emerged wiser from the 2008 and 2009 fallout. We have changed our processes and the choice of products. And we are putting more stringent sales procedures into place. The whole industry is changing, as are the regulators.” 

He accepted that compared to other property funds, their fund had underperformed.

But in doing this and apologising, Chalmers said that bank had compared this fund to the performance of others on the market, and is proposing by its offer to fully compensate investors for this underperformance. 

“We took the most appropriate index and we compared this with another local property fund (HSBC). We are compensating for the totality of the underperformance. “Today, the HSBC property fund is trading at 68c. We are offering our investors 75c.”

He said that the bank wanted to win back the goodwill of our large investor base.

He admitted that the bank had suffered bad publicity but they wanted to repair the damage done to the reputation of the bank.

“We are a caring bank and we are very important to Malta. We are very keen to do the right thing, we have more than one constituency and these include our customers, our reputation, our staff and our shareholders.”

Chalmers talked diplomatically of the ‘mischievous and irresponsible talk’ which referred to the €17 million redemptions.  “The percentage redemption is very much at par with what happened in other funds. It happened only because investors sensed the volatile markets and investors ran for cover.”

He pointed out that it had been said that the redemptions were much higher than that of the HSBC property fund. 

“But of course, it is because it is a much bigger fund.”

He spoke of the other accusation that there were people privy to privileged information. He was emphatic when he said that this was absolutely not the case.

“Yes, we did have a number of people who work with Bank of Valletta who did redeem, yes we did – but it was an infinitesimal number and they did not have access to privileged information.”

Chalmers also commented on the ‘spurious references’ to a SICAV  director of ‘unimpeachable integrity’ who had in fact disclosed in the annual report in 2008 that he had redeemed his funds.

“This kind of attack is irresponsible. To imply that he had redeemed solely because he had access to privileged information is inexcusable.”

He said that the decision to suspend the fund could not have been leaked – but he emphasised that if it transpired that any individual had in fact leaked that information, they would take the most serious measures to address this situation.

Would he resign?

“My office is the most senior position in the bank, and I accept full responsibility. In accepting this full responsibility, I need to deal with the situation – I owe it to the investors, the bank’s reputation, our shareholders and our staff. I am accepting this responsibility – it is not in my character to walk away.  I need to deal with these issues and with the here and the now. I will not walk away at this moment.

“My focus is 100% on resolving this issue.  I will do this to the best of my ability. And I will not be dragged into the realm of insults and character assassination.”

On the political controversy piloted by Labour MP Evarist Bartolo, he said that he is

“politically colour blind.”

“Party politics should have no place in the bank. Though I am appointed by the government of the day, I am not representing them.  I am after correct governance.  If it becomes a political football this institution will be damaged.”