Regulator rejects golden passport fund’s nominee for Lombard Bank director

Paul Abela, who was one of two people nominated by the National Development and Social Fund to serve as a director on Lombard Bank, has failed to receive regulatory approval • John Bonello gets green light

Lombard Bank has only received regulatory approval for one of two nominees made to its board by the NDSF
Lombard Bank has only received regulatory approval for one of two nominees made to its board by the NDSF

One of two nominees appointed by the National Development and Social Fund to Lombard Bank’s board has failed to get regulatory approval, MaltaToday has learnt.

In a short announcement on the Malta Stock Exchange on Wednesday, Lombard Bank announced that Dr John Bonello received regulatory approval to be appointed a director.

However, the statement made no mention of the second NDSF nominee, Paul Abela, who is also president of the Chamber of SMEs.

Bonello and Abela were nominated together in June by the NDSF, which is Lombard Bank’s largest shareholder, to serve as non-executive directors on the bank’s board. The nominations required approval by the Malta Financial Services Authority.

However, following the due diligence exercise carried out by the regulator, it appears that the bank only received the green light for Bonello’s nomination.

Sources within the banking sector said the regulator objected to Abela’s nomination because of pending criminal procedures against him related to perjury. “Pending criminal procedures would automatically raise red flags at a regulatory level,” the sources said.

The NDSF is believed to have withdrawn Abela’s nomination but has yet to nominate someone else instead.

The criminal case against Abela stems from a separate court case from 2010 in which former Chamber of SMEs member Sandro Chetcuti had been charged with assaulting then director general Vince Farrugia.

The original charge of attempted murder against Chetcuti had been trumped up and eventually police changed it to grievous bodily harm. Chetcuti was found guilty of slightly injuring Farrugia, who has since passed away, and was handed down a suspended sentence.

But the magistrate deciding the Chetcuti case had also asked the police to take action against several witnesses after they lied under oath while testifying against Chetcuti.

Abela was one of the witnesses indicated by the magistrate as having committed perjury. The case against Abela is ongoing.

The NDSF is Malta's equivalent of a sovereign wealth fund and is financed by income derived from the golden passport scheme. The fund had bought 49% of Lombard Bank's shares in 2018 when it bought out the faltering Cyprus Popular Bank. The investment had to be temporary but five years later the NDSF remains Lombard's largest shareholder.

Last June, the NDSF voted in favour of a resolution to issue new shares and increase the bank’s share capital after it had blocked the board’s proposal in 2022. At the time the NDSF was not represented on the bank's board despite holding the largest stake and subsequently nominated two directors.