Maltese bond holders in the failed Dutch bank SNS Reaal included 20 clients of HSBC Bank, according to activist investor Frans Faas.
Mr Faas, chairman of the Bondholders Foundation SNS, a campaign group, claimed the bond holders were enticed to invest a minimum of €50,000 even when trouble was brewing at SNS.
The bonds sold in Malta seemed to follow the same pattern as that observed in Greece, he noted, where HSBC clients were sold bonds with a minimum threshold of €50,000.
Mr Faas is leading the charges on behalf of bond holders who lost millions when SNS was expropriated without compensation by the Dutch government in February.
The bank, the fourth largest in the Netherlands, never recovered from the 2008 financial crisis and was bailed out by the Dutch government to the tune of €10 billion.
A total of 183 Maltese investors bought nearly €3 million in high-interest bonds in SNS, with a majority being clients of Żabbar-based financial intermediary company All Invest.
All Invest is winding down its business but the Malta Financial Services Authority last week ordered the company to stop the transfer of its clients to other financial intermediary companies after no authorisation was sought.
Mr Faas outlined the details of the sale by HSBC of SNS bonds in a letter to the UK financial services regulator. The HSBC Group is headquartered in the UK.
Speaking to Times of Malta, he explained some 30 Greek clients of HSBC Greece were sold the SNS bonds in violation of EU investment services regulations.
“These clients were told the minimum face value of this bond was €50,000, which forced them to invest a majority of their available funds, if not all, in this subordinated bond of the troubled Dutch bank in a period [October 2012-January 2013] when the problems of SNS were already widely known.”
Mr Faas said a €50,000 minimum face value was typical for the over-the-counter market but this was not a market where retail investors normally traded. On Euronext, the regular place for private investors, the bond was traded in multiples of €1,000, he added.
A spokesman for HSBC Bank Malta said it was bank policy not to comment on specific clients but explained that customers could identify and buy a number of bonds through the bank.
“On client instructions, HSBC can then source these securities from external regulated markets to fulfil the requested orders on an execution only basis,” he said. Questions as to how the bank was handling this case with its clients and whether it was aware of the deteriorating situation at SNS when it sold the bonds remained unanswered.
Mr Faas is expected in Malta next week, when he intends to meet with SNS bond holders and the MFSA.
“I want to address Maltese bond holders on compensation as a result of the expropriation by the Dutch government and compensation based on the violation of EU investment rules,” he said.
Some 200 institutional and private investors from around the world have registered with the foundation. They represent a loss of €125 million.
Mr Faas’s e-mail address is: info@sos-ns.nl