Ombudsman tells MFSA to step up efforts in updating Nemea depositors
The Ombudsman has urged the Malta Financial Services Authority to regularly update depositors and those having an interest in Nemea Bank’s ongoing situation
The Ombudsman has urged the Malta Financial Services Authority to regularly update depositors and those having an interest in Nemea Bank’s ongoing situation.
The MEP candidate Arnold Cassola had lodged a complaint against the MFSA and PricewaterhouseCoopers, the firm granted control of Nemea Bank after its licence was suspended by the European Central Bank.
Cassola, an account holder with Nemea Bank, said that he had not been provided with continuous updates on the actions being taken by the authority according to the Malta Depositor Compensation Scheme.
Nemea Bank had its banking licence withdrawn by the European Central Bank on 23 March 2017, over serious regulatory shortcomings.
Together with the complaint, Cassola also filed a copy of his correspondence with the administrator and the communications unit of the MFSA, with the last correspondence being provided on 10 October 2018. Among other things, the last provided update from the MFSA stated that the financial position of the bank remained precarious, so much so that as of August 2018, its liabilities exceeded its assets.
The authority also said that it was a “prerogative of the banking regulatory supervisor to appoint a liquidator for the entity”, while confirming that no liquidator had been appointed. “Hence any funds may be eventually distributed as part of the process of the entity’s dissolution. As noted previously, the dissolution process has not yet started,” the update from PwC had read.
In light of this response, Cassola sent an e-mail to the MFSA’s Head of Banking Supervision on 9 November 2018, seeking an explanation as to why a liquidator had not been appointed, while also requesting an update on the bank’s situation.
Cassola’s e-mail and subsequent others were ignored by the authority, leading him to file the complaint with the Ombudsman.
On the issue raised in regards to the appointment of a liquidator, the MFSA stated that the authority had advised Cassola to seek professional assistance, while maintaining that “subsequent to the withdrawal of the banking licence, the authority could not provide specific indications on specific actions”, including the appointment of a liquidator.
The MFSA also responded to a string of e-mails sent by Cassola, in which he had enquired on what further regulatory action was being considered.
The authority said that a letter was sent stating that as the ‘competent person’, PwC was still managing the bank’s assets and “all efforts were being made to realise maximum proceeds from disposal of such assets”.
On Cassola’s insistence that he was still awaiting updates on the refund of the remaining balance held with the entity, and when a liquidator would be appointed, the MFSA said that he should have directed his queries to the communications function of the authority rather than the supervisory ones.
The Ombudsman disagreed with the statement, stating that the principles of a good administration dictate that public entities should provide “prompt and timely” replies.
“The authority seems to contend that once enquires are not directed to the proper section, then these can be disregarded. This Office is of the opinion that once the e-mails were received by the Authority’s Head of Banking Supervision, these should have either been directed to the proper channel or referred the complaint to the appropriate avenue,” the Ombudsman declared.