BOV decision not to renew CEO’s contract taken by mutual agreement, bank chair says

Bank of Valletta chair Gordon Cordina says a succession process to replace Rick Hunkin as CEO was started early to ensure an orderly and timely transition

BOV chair Gordon Cordina
BOV chair Gordon Cordina

The decision not to renew Rick Hunkin’s contract as CEO at Bank of Valletta was taken by mutual agreement, bank chair Gordon Cordina said.

Hunkin’s contract expires in November but the bank started the succession process a year before to ensure “an orderly transition”, Cordina told journalists on Thursday.

“Rick Hunkin and myself meet regularly and we arrived at the conclusion that it is in the best interest of the bank and the CEO to initiate an early succession process,” he said.

Cordina was coy about the reasons behind the decision to replace Hunkin but hinted that there may have been internal tension over his management style.

“These stresses exist everywhere in any organisation… I wasn’t here when Hunkin was appointed but it may be the bank needed a certain type of management style when the transformation process started to get things going fast but going forward we may need a different management style,” Cordina said when asked whether the decision was the result of clashes with the board and management.

But Cordina ruled out mismanagement and wrongdoing as the basis for the Hunkin’s eventual replacement.

“The board has no such evidence otherwise we would be taking a different course of action,” he said. “We want to ensure we have the best talent to address the challenges going forward.”

BOV CEO Rick Hunkin's contract expires in November and will not be renewed
BOV CEO Rick Hunkin's contract expires in November and will not be renewed

Cordina said BOV implemented an aggressive transformation after a 2019 oversight report by the European Central Bank flagged some serious shortcomings. Hunkin was recruited in the wake of that report to kick-start the process to bolster the bank’s risk management and compliance with regulatory requirements.

“Regulators accept that a lot of progress has been registered since 2019. Hunkin contributed to this. I am happy with progress achieved in many areas but this does not necessarily mean he should be the person to take us forward to face the challenges of the future,” Cordina said, adding the transformation was nowhere near the finished product.

He insisted that it was his duty and prerogative to start a succession process, which the board has approved. “The process started early to allow us sufficient time to scout the market and find the best possible talent, internally or externally, and undergo the regulatory approval process.”

Cordina said the succession process will ensure the bank continues to operate business as usual. “The bank is steady as she goes and Hunkin will remain in office until his contract expires.”

Asked about significant expenditures on consultancies over the past two years on Hunkin’s watch, Cordina said expenditures of a significant magnitude are subject to a governance process that involves “several layers and many pairs of eyes”.

“On the expenditures quoted in the media, the board has no evidence of wrongdoing or bad management or mismanagement, otherwise it would be taking a different course of action,” Cordina said.

New CEO

Cordina said various attributes will be sought in the new CEO, including having long enough experience in the banking business at a sufficiently senior level and having international experience. “I am not necessarily saying the person has to be foreign,” he insisted.

Significantly, the new CEO will have to be able to foster teamwork and ensure the transformation is sensitive to the bank’s capacity.

“Going forward sensitivity to culture and the bank’s skills and constraints is necessary as is a commitment to risk management and anti-money laundering regulations,” Cordina said.

The bank, which employs just over 2,000 people, is targeting June as a deadline for the choice of the CEO so that regulatory approval, which can last anything between three and four months, will come in time for the formal appointment towards the end of the year.