A circular issued recently by the Treasury to all holders of Malta Government Stocks (MGS) encourages holders to opt for capital repayment to be remitted electronically to the investor’s bank account instead of settlement by cheque.

Prima facie it makes sense for one to accept this offer as, apart from the fact that direct bank settlement is clearly more convenient, there is always a risk of a cheque going astray. Indeed, it is already the practice for the Treasury to remit half-yearly interest directly to the holder’s bank account.

However, the fly in the ointment with the Treasury’s attempt to get MGS holders to extend this payment system to capital repayments is that this is conditional on the Treasury not entertaining any request to effect changes once the choice has been made by the holder.

This is totally unreasonable as one’s circumstances could well change during the period until the redemption date. Why should the Treasury expect one to be tied down to a condition that would extend for a good part of one’s life?

Another point worth considering is that banks levy a charge of €4 for electronic transfers (SEPA payments) to another bank. At the rate that local banks are increasing their charges so as to boost non-interest income, who knows what the charge will be in 2030 or even 2040?

On the other hand receiving a cheque at redemption involves no bank charges for the investor but, of course, entails a visit to the bank. Settlement by cheque entails a slightly more inconvenient method of payment at redemption for the Treasury.

The Treasury’s ostensible good intentions are, in myview, heavily outweighed bythe condition that, once given, redemption instructions byway of direct bank transfer cannot be changed.

I urge the Treasury to reconsider removing this unreasonable condition if they expecta high level of response from MGS holders.