How ironic the world seems to be at times. It was under a Labour government that this saga had its roots and it seems that it is under another Labour government that this wrong is to be put right. The Constitutional Court ruling of last week declaring that the transfer of shares of the National Bank of Malta (NBM) shareholders to the Government of Malta in 1973, constituted a breach of shareholder human rights, should it seems, open the way for an out of court settlement and compensation.
Way back in the early ‘90s, one of our staff spent three months at the National Library, with the express mission of finding out the precise facts published about this story as it unfolded in 1973.
Of course, 20 years had already passed and we were not interested in hearsay or gossip or opinion; our express aim was to take a view of the facts as they were reported in the press at that time.
Our findings were condensed in book form and handed to the then Prime Minister Eddie Fenech Adami. Nothing could be done, he said, as the case was still sub judice.
I can compare the plight of these shareholders to that of Moses leading the Israelites into the Sinai desert on to the Promised Land. For 40 years they wondered here and there through thick and thin, within the vast expanse of the court corridors.
Like the Israelites, very few of the original shareholders survived. Some died directly as a consequence of these tragic circumstances; some lost all their worldly income and survived for a time under very trying conditions.
Others – the young warriors – have soldiered on and now, 40 years later they are within sight of the Promised Land.
I believe the question being asked now is how much, how and when.
Not an easy exercise. The base of that 1973 NBM value, however, must be established as this is very relevant. Does one rely on the property values at the time and compare these to the values today? I wonder what for example the bank premises in Republic Street (valued then at cost less depreciation) would be valued at today.
Would inflation play a part? Minimum wage then and now maybe? What about the millions provided for in 1973 as bad debts? (Bad debt provision was upped from €5,540,587 to €13,911,018 yet the bank was declared bankrupt because of a deficit of Lm253,000 (€589,331). These provisions were slowly written back to profits over the years and by 1978 provision was considered adequate at only Lm1,647,000 (€3,836,477). Would the extra provision be taken into consideration? I believe the answer lies in a formula relying on some if not all these factors and more.
And how will the figure agreed upon be paid? Maybe in cash?
Difficult, as the Minister of Finance would not have provided for this extraordinary payment in the 2013/14 budget.
By the creation of a bond? Possibly. At today’s low interest rate scenario this would not be so expensive. However, all debts must eventually be repaid. Again the Exchequer might refuse.
The government still owns 25 per cent of the present Bank of Valletta. Could this source if sold – and sold well, placed in the right hands – be a possibility? Maybe.
Selling well is so important as the sale proceeds should not only cover a decent settlement but also leave a substantial proportion to contribute to our country’s finances.
There is another large shareholder in the Bank of Valletta i.e. Banco di Sicilia, now Unicredito, who may wish to sell. This 14.55 per cent stake, if coupled with the 25.23 per cent government holding, though still a minority, would certainly hold major influence and importance within the bank.
In today’s financial world, Malta is not what it was even 20 years ago. We are now a force to be reckoned with, punching above our weight. So may there be someone out there in banking – both local and foreign – looking into this scenario as it plays out?
Our banking system is sound, very sound, in spite of the stormy periods of 2008-2012. Indeed an attractive opportunity.
What a scenario! What an opportunity for our young Prime Minister to turn this new once difficult challenge into a winning combination, where others have shied away for so long.
What a chance to reverse an event which has hung onto our banking system for too long and be the one to cancel out history and show doubters that wrongs can really now be put right.
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This article is the objective and independent opinion of the author. The information contained in the article is based on public information.
Curmi and Partners Ltd is a member of the Malta Stock Exchange, and is licensed by the MFSA to conduct investment services business.
Neville Curmi is a director at Curmi & Partners Ltd.