Satabank pay €689 an hour for competent person

Satabank has protested exorbitant rates it is being charged by the “competent persons” appointed to take control of its bank, in a formal protest lodged with the Malta Financial Services Tribunal.

Satabank, which was ordered by the financial regulator to cease business activity, said it was paying members of the international team up to €689 an hour.

The MFSA appointed a team from Ernst & Young to monitor the bank in the proper conduct of its business on 15 October, but five days later it told Satabank to cease from taking new deposits or effecting withdrawals, freezing the bank’s operations.

“It is absurd and incongruous that the competent person should charge the bank at the exorbitant and unreasonable hourly rates… depleting the bank’s capital and reserves in the process, while thousands of depositors are unable to access their funds,” the bank said.

Satabank said the international team rates range from €269 an hour for a senior official, to €689 an hour for partners. Managers are paid €372 and senior managers get €535.

“In the context of a small bank that is a Maltese-licensed and regulated credit institution, the above rates are exorbitant and unreasonable. [They] are clearly not in the interest of the bank, nor of its depositors, employees and shareholders. If such rates were to be maintained unabated, the fees of the competent person will inevitably deplete the bank’s capital…”

Satabank said it had no objection to hourly rates indicated by EY’s “Malta team” – whose rates start at €90 an hour and are capped at €240 – but said the “international team” rates were “an abuse of discretion since such rates are not objectively justifiable and are manifestly unfair.”

The bank has also accused the MFSA of making it impossible for Satabank to demonstrate its compliance with MFSA requirements and anti-money laundering rules, by taking just five days from the appointment of the competent person to formally shut down the bank’s trading activities.

“Prior to the [MFSA’s directive] of 20 October, the bank continued to meet its financial prudential requirements, was liquid and operating well above its minimum regulatory capital ratios. The bank’s liquidity was adequate to ensure normal day-to-day running and operations.”

Satabank accused the MFSA of creating confusion in the market “and fear and suspicion in the eyes of the general public and depositors as to the bank’s liquidity.”

“Needless to say, preventing customers to operate their accounts in an ordinary manner created speculation and uncertainty on the bank’s financial soundness and liquidity,” Satabank said, after clients were prevented from accessing their online banking platform.

Satabank offered some 5,000 clients an innovative online and e-money platform but since the MFSA’s directives, various companies have been unable to effect withdrawals and pay employees’ salaries.

Clients had to hold a protest in Valletta on Sunday but only two individuals turned up. The group behind these protests said it will be meeting at different locations throughout the week, including Satabank, EY, the MFSA offices, as well as the finance ministry, the Office of the Prime Minister, and the President’s palace.

“We appreciate the huge work EY is doing to check more than 5,000 customers, but we do not agree on the priorities,” Francesco Trimnoli, an Italian lawyer resident in Malta who runs the banking clients association Atusbuf, said. “We think that EY has to focus first on the employees who get their salaries on Satabank account and unfreeze it if the account complies with a normal employee’s account. This can be carried out in less than 24 days! Too much for those who cannot buy food, but even for the SMEs who have their business as their only source of profit, as well for those who have very few transactions on their account with a small volume, it is easy to be found and unfrozen.”

EY was appointed by the Malta Financial Services Authority (MFSA) to act in the role of ‘Competent Person’ in connection with Satabank. This is the first time in Maltese banking History that the MFSA, in coordination with the Central Bank of Malta and the FIAU, have taken such action against a retail and commercial bank.

“The MFSA recognised from the start the need to involve international banking expertise. Consequently EY’s team contains a limited number of international consultants on international rates with the majority of the team on local rates. Due to the sensitivity of the case and other confidentiality requirements, the MFSA obliged EY not to publicly discuss their role,” the MFSA said.

“It is vital we have the appropriate team which can competently deliver the best outcome for Satabank’s customers while safeguarding the Maltese financial system.”