Finco Treasury Management, the firm that has been leading the protest against Bank of Valletta’s handling of a foreign property fund that went bust, has accepted the bank’s settlement offer on behalf of its clients, The Times has learnt.
The company’s managing director Paul Bonello confirmed that he accepted the bank’s offer in respect of the company’s 72 original clients who will now be unable to sue BOV for damages.
Mr Bonello said that Finco’s advice both to its original clients and those who joined after his company went public with its criticism of BOV was that the court battle was not really worth it for small, individual investors because of the expenses and time a court case would take.
“While there is no doubt that BOV’s offer is immoral and unjust, and is shameful for the bank, the regulator and the country, because of practical considerations... the court battle is not worth it for someone who has less than, say 100,000 shares,” he said.
Finco had about one million shares in its name on behalf of the 72 investors, which works to about 14,000 shares each. “Let’s say those shares cost them €14,000 and that through BOV’s offer they are being short-changed by about 30 per cent.
Am I so stupid to advise our client to go to court and wait all those years for some €4,500? We don’t put our pride above our client’s interests. It’s still an injustice and they are being short-changed but I’m not going to advise my client to go to court,” Mr Bonello said.
However, he promised the battle would not stop here. Among the new clients Finco has gained after it raised the problems with BOV’s La Vallette Multi-Manager Property Fund are “scores” of much larger investors who have decided to proceed with the court case. “So we will still be in court representing these big clients who have chosen to go to court. BOV did not get rid of us. I have no doubt history is going to bear me out.”
During an investor’s meeting on Friday, the company’s appointed lawyer, Ian Refalo, discussed the pros and cons of a court case and several small investors present left with the impression they were better off accepting the BOV offer.
The news comes on the eve of the bank’s deadline today on its 75c per share offer in lieu of losses incurred on the La Vallette Multi-Manager Property fund. The “settlement”, which, the bank has insisted, was not an admission of guilt, is believed to be costing the bank about €45 million. BOV retained the right to withdraw its offer if less than 70 per cent of investors accept it.
A spokesman for the bank would not say yesterday how many investors had accepted the offer, sticking to a previous statement where the bank said it would disclose the number after the offer closed. However, previously the bank had also said that hundreds of the estimated 2,000 investors had subscribed to the offer.
Finco was also considering a lawsuit against the Malta Financial Services Authority, which, Mr Bonello said, had “failed big time” despite fining the bank €347,816 for regulatory breaches, a decision BOV is appealing.
“We are meant to follow the British system.
“Just this year the financial regulator and the financial Ombudsman there decided 11 cases and in all of them they fined and ordered the bank to pay compensation. The banks accept and accept gracefully and even apologise but that is the difference between someone mature and someone who is not,” Mr Bonello said.
Instead, BOV was allowed to “blackmail” small investors into taking their offer or face the prospect of a long battle in court, he added.
“This is what the BOV chairman meant last August with his ‘put up or shut up’ (a phrase used in a BOV statement) because he knew that 99 per cent of investors are small investors with between €10,000 and €40,000 and knew that when it comes to court, it takes long,” Mr Bonello said.