Massive take-up of BOV offer

‘Offer was 30 % less than initial capital invested’

Bank of Valletta has received a massive response to its financial proposal to settle the property fund dispute, with 94 per cent of investors taking up the offer, which expired at the close of business yesterday.

The bank said in a brief statement that the La Valette Multi-Manager Property Fund investors who took up its offer represented 95 per cent of the shares in issue.

BOV had offered investors 75c per share to buy back their investment and compensate them for the fund’s underperformance.

“Payments of the amounts due are being processed and will reach those investors who accepted the offer by not later than July 6,” the bank said.

Investors had until yesterday to submit their application, a deadline imposed by the bank when announcing the offer in May.

The high response did not come as a surprise to Finco Treasury Management managing director Paul Bonello, who has been leading the charges against the bank.

“My advice to clients was to take up the offer because it made little sense for small investors, most of who are pensioners, to go to court even if they are right. But this is a sad day for investor protection in Malta,” Mr Bonello said, criticising the financial services regulator for failing to protect the interests of investors.

The Malta Financial Services Authority, he said, had an obligation to order the bank to put off the offer until all investigations are concluded.

“Abroad, most notably in the UK, banks have compensated investors by bringing them to the same state they were in at the time the investment was made. The MFSA had the power to judge whether BOV’s offer was adequate but the regulator has proved to be impotent and ineffective,” Mr Bonello said.

Investors who took up the conditional offer agreed not to sue the bank for damages. The offer was around 30 per cent less than the initial capital invested by the fund shareholders.

The settlement is expected to cost the bank close to €45 million.

The bank has insisted the offer is not an admission of guilt in any of the three investigations launched by the MFSA on the handling of the fund.

In the only investigation concluded to date, the MFSA said the bank had breached the investment regulations listed in the prospectus when the property fund invested in high risk sub-funds that went bust. The regulator fined BOV €347,816 for the breach but the bank has said it will appeal.

The MFSA has not concluded two other investigations dealing with the bank’s selling techniques when it marketed the property fund and allegations that some investors had privileged information that enabled them to sell off their investment just before the property fund was frozen in the summer of 2008.

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