BOV stands by decision to loan cash to Steward Healthcare

Bank of Valletta's top executives defend the bank's decision to loan €36 million to Steward Healthcare, citing rigorous loan approval procedures and maintaining client confidentiality

BOV top brass is standing by the bank’s decision to loan €36 million to Steward Healthcare, insisting that its loan approval procedures are of high standard.

Speaking at the launch of the bank’s Q1 results, CEO Kenneth Farrugia and Chairman Gordon Cordina said that they cannot speak about individual clients, but said that the company’s loan approval procedures are rigorous.

They also declined to comment on any material impact sustained from the anullment of government contracts awarded to Steward Healthcare.

Last month, the bank similarly refused to comment on a €36 million loan to Steward Healthcare.

It said it would do so in order to maintain client confidentiality and not prejudice company interests.

Bank will not exclude high-rise project investments

Asked about whether the bank will finance high-rise buildings, despite low consumer demand for these properties, Farrugia said that BOV will not exclude projects from the bank’s portfolio, particularly if they have ESG-goals embedded.

Cordina added that any project financed by the bank will need to be financially viable going into the future. “That’s perhaps where this bank is uniquely placed to look at the macroeconomy and make its assessments on the financing of relatively large projects in the economy.”

“The bank remains open for good business to create the selectively right dividends for our country,” he said.

These comments come after APS Bank CEO and chair of the Malta Bankers’ Association said that local banks are not seeing consumer demand for high-rise buildings in Malta, despite many such projects being developed.

Credit Suisse impact absorbed by senior non-preferred notes

Last December, Bank of Valletta announced a successful issue of senior non-preferred notes, which the bank said will help it meet regulatory requirements for eligible liabilities, and grow its lending book and treasury assets.

The issue attracted an order book of around €460 million, of which approximately €230 million came from domestic investors. The issue was closed at €350 million.

This was a first for Bank of Valletta, making its debut in the international debt capital markets.

Cordina said that this capital helped absorb the full loss of the Credit Suisse shock, which saw the Swiss bank being bailed out by UBS.

“This shows how important it was to issue that capital. It was a first for Malta and the bank, and there were several hurdles to convince the international market of our internal controls and governance systems,” he said.