Disgruntled shareholders

During the April 18 HSBC annual general meeting, I put a question to the board of directors about the bank’s share price.

I asked if anyone could explain how come that in Malta the share price of a beer producing company is worth more than those of an international bank such as HSBC.

I also presented hypotheses about this phenomenon.

It could be that it is in the bank’s interest that shares are kept low so that if the bank decides to close all its branches in Malta it would be easy to sell at a cheap price and at great profit before leaving the island.

It could be that what the Germans have speculated – that the banks in Malta are in the same situation as those in Cyprus – might have some truth. Finally I asked, “who is keeping the share prices so low?”.

The CEO answered my question. He said the bank has no control on the market. He also suggested that if we want our share prices to rise in value we must start selling our shares.

His answer shows clearly that the bank has no intention of seeing the share prices go higher. One has to keep in mind that the bank is the major shareholder with over 70 per cent of the shares. The bank can afford to sell at a profit as it bought its shares at a ridiculous price.

But if we sell our shares, we will be losing about 30 per cent or even more. Another observation I made is that companies all over the world whose shares remain considerably low for a long period of time, say four years and over, at the end declare bankruptcy.

We, shareholders, believe that the Finance Ministry should take this matter in its hands as it is affecting thousands of small shareholders.

It should investigate what is happening at the Malta Stock Exchange, what is keeping the share prices from reaching a reasonable level that reflects the greatness of our banks so that we can recover the money we have invested in these banks and once again instil public trust in our banks and companies.