Updated August 2021: Issues between the company and MFSA have since been settled.
A fund manager who wanted to transfer a portfolio worth €1.4 billion to Malta is claiming unfair treatment by the Maltese financial services watchdog.
Alberto Matta, the Italian financier from Futura Investment Management, said the application for a licence upgrade to adhere to EU regulations had been stuck “in limbo” for the past two years.
The company, which has held an investment licence from the Malta Financial Services Authority since 2011, applied for an upgrade in 2014 to become a full alternative investment fund manager (AIFM) as per EU directives.
Futura received “in principle approval” in March 2015, but following media reports in Italy that linked Futura to the problems faced by Banca Popolare di Vicenza, the MFSA froze the upgrade process indefinitely.
A request for information from this newspaper to the MFSA seeking to under-stand the reasons behind its decision to freeze Futura’s upgrade process had not been answered by the time of writing.
Mr Matta said the company had wanted to divert the business of the entire group to Malta with a combined portfolio of €1.4 billion, making it one of the largest alternative investment fund managers on the island.
“Our idea was that Futura Investment Management would be the AIFM not only for Malta-based Futura Funds Sicav but also for Luxembourg-based Optimum Evolution Fund,” Mr Matta said.
He defended his companies’ behaviour, insisting that neither Futura nor any of its affiliates were ever investigated by the Italian financial authorities or the European Central Bank in the wake of the Vicenza bank failure.
We are witnessing a spectacular case of unprofessional regulatory Stalinism
The MFSA’s decision denied Futura’s clients the greater protection demanded by EU regulations, Mr Matta said.
The clients include several Maltese, who invested almost €8 million in property in Bulgaria. They expressed concern to this newspaper over the matter.
When it was suggested that the MFSA’s cautious approach was correct in view of the turmoil caused by the financial crisis of 2008, Mr Matta insisted the regulator’s decision was not prudent.
“A fair and prudent approach could have been the issuance of the licence with stringent disclosure and monitoring requirements to protect investors and the immediate revocation of the licence if and when wrongdoing was found,” Mr Matta said.
The EU directive states that a regulator should issue a positive or negative response within six months of the application being made if postponement of the process was not contemplated.
“Why the MFSA would choose this line of action is incomprehensible, illogical and negligent. We are witnessing a spectacular case of unprofessional regulatory Stalinism,” he said.
The case in Italy that gave the MFSA cold feet developed in 2015, when the ECB forced the Vicenza bank to reduce the nominal value of its shares when it emerged that the value had been kept artificially high for years.
The case made headlines because long-standing retail clients lost millions of euros in savings. Clients had been asked to use part of the loans they took out to buy shares in the bank.
Mr Matta explained that Banca Popolare di Vicenza had invested a significant amount in two dedicated funds of the Optimum Luxembourg platform, which, in turn, invested in assets managed directly or indirectly by the Malta-based Futura Funds Sicav.
Money from the bank was invested in one of the Futura sub funds dedicated to buying shares in unlisted cooperative banks in Italy. This sub fund, in turn, bought some shares on the secondary market of Banca Popolare di Vicenza, creating what is known as a circular investment. Mr Matta said this circular investment was perfectly legal and had been fully disclosed by Futura to the bank.
He insisted Italian newspapers “erroneously” alleged that Futura was being investigated by the Italian Central Bank and the ECB in relation to Vicenza’s share capital increase in 2014.
Mr Matta said that his companies had never participated in any way in the share capital increase completed by Banca Popolare di Vicenza in 2014 and the following years.
“The shares in the bank were purchased in the secondary market well before the share capital increase was even announced, and sold in different tranches shortly after purchase,” he noted.
As a result of the MFSA’s decision, Futura’s Malta-based funds have been instructed not to take on new business and reduce the assets under management to below €100 million. The company is contesting the ruling.
Futura also plans to file a formal complaint with the European regulator against the MFSA.
The situation in Malta has left Mr Matta with a sour taste, having once described the island as a “hidden pearl” in a 2014 interview with World Finance magazine.
“While we are completely in favour of a conservative and prudent approach to regulation, we also believe that companies and individuals should be treated fairly and punished when wrongdoing is effectively found,” he said.
kurt.sansone@timesofmalta.com