Bank of Valletta is seeking shareholder approval to double its share capital to €1 billion in anticipation of any future regulatory demands to increase capital buffers.

The bank’s authorised share capital currently stands at €500 million of which €420 million is issued.

However, with the bank committed to issue €150 million worth of shares over the coming year, the issued share capital will overshoot the existing limit.

Directors are thus asking for an increase in the authorised share capital to be able to move ahead with the planned share issue for this year and any other they may consider in the future.

The resolution is one of four proposed by the board of directors that will be discussed at an extraordinary general meeting for shareholders on July 27.

In an explanatory note, the bank said directors were proposing “the creation of sufficient space in the authorised share capital of the company that would enable them to react to demands on capital increases as may be necessary”.

The background to this proposal lies in the ever-increasing demands by regulators on credit institutions to increase the capital structure to serve as a buffer in bad times.

“The increase in the authorised share capital will not necessarily be issued but will be available, subject to the authorisation that needs to be given every five years by shareholders to the directors to issue such shares,” the explanatory note read.

Banks have had to comply with stricter rules since the 2008 financial crisis that saw large credit institutions buckle under the weight of bad debts.

Bank of Valletta’s directors are also proposing a new memorandum and articles of association as well as increasing the maximum limit of the issued share capital which any one shareholder may hold in the company.

The proposal suggests increasing the current individual shareholding limit of 3% the issued share capital to 5%.