Bank of Valletta has 30 days to reply to the Malta Financial Services Authority’s investigation into a property fund, which will then be followed by a new report, according to Malta Financial Services Authority chairman Joseph Bannister.

The property fund has been the subject of a number of judicial protests filed by about 200 investors who claimed breaches of investment restrictions laid down in the fund prospectus.

It was also claimed that the fund invested in nine underlying funds that “exposed investors to gearing of more than 100 per cent of their respective net assets”.

Prof. Banister told The Times there were a number of investigations under way, not just one. “The findings of the first investigation are ready and have been incorporated into reports which have been sent to Bank of Valletta and Valletta Fund Management for their consideration.”

Prof. Banister would not comment on the actual findings, saying BOV and VFM had to first reply to its report and then the authority would decide “what action, if any, it should take”.

“We will take all the necessary action, if any, as the law permits. We could suggest the bank takes remedial measures appropriate to the findings. The law allows us to impose a fine – up to a maximum amount of just under €100,000 – and we have imposed fines in the past. However, we have to allow the bank to respond to our report, because it could appeal against the findings.”

The property fund’s losses are in part being blamed on the Jersey-based Belgravia Financial Services Group Ltd, whose funds were suspended in 2008 and which was placed under criminal investigation. La Valette Funds Sicav had a substantial investment in Belgravia and the investors claimed they were given “a misleading account of the situation”.

Full interview with Prof. Bannister in The Times Business on Thursday.