A Bank of Valletta branch

The chairman of the National Development and Social Fund, which has just invested €21.8 million in Bank of Valletta is the CEO of a company half-owned by BOV

The fund, which by the end of last month contained €360 million from passport sales. It was set up to contribute to major projects of “national importance” and to contribute to a raft of social initiatives.

Contacted yesterday, fund chairman David Curmi insisted the decision to invest in BOV was a unanimous one, taken by the board.

Mr Curmi said the success or otherwise of the BOV share sale had no bearing on MSV Life, of which he is chief executive officer and in which the bank has a 50 per cent stake.

MSV Life’s directors include the bank’s CEO, Mario Mallia, and former chairman John Cassar White. Mr Curmi said that, in his capacity as fund chairman, he considered the national interest to prevail over any other.

He said the BOV investment allowed the fund to use its excess liquidity in a way that would yield a long-term return. Such investment offered better opportunities than other comparable ones and was better than depositing the money at the Central Bank, earning negative interest rates, Mr Curmi added.

He said the investment represented less than eight per cent of the money held by the fund.

The fund came under fire by the Nationalist Party yesterday over its decision to invest in BOV. Opposition finance spokesman Mario de Marco said the government was using a clause obliging the fund to undertake an initiative for the benefit of future generations to give itself “unfettered powers” to spend money generated from passport sales.

On the other hand, stockbrokers expressed their frustration with the Times of Malta over the way the bank handled the rights issue. The shares bought by the National Development and Social Fund were made available after current BOV shareholders UniCredit SpA waived their rights to buy the shares.

The stockbrokers who spoke to this newspaper said that, during an information meeting, the bank had merely said UniCredit SpA would not be taking up their rights to the shares, without specifying they had already been assigned to the fund.

“The government has effectively crowded out the private sector and increased its own control over BOV. I highly doubt the fund will vote against the government in board meetings,” one stockbroker said.

In a statement earlier this month, the bank said the share offer was heavily oversubscribed.

Another stockbroker said she had to send back all the share applications, together with refunds, after the fund took up the shares.

“The BOV should have informed us from the outset that these UniCredit SpA shares were being sold to the fund instead of giving the impression they would be offered to bank employees and the public,” she remarked.