A sale agreement is to be signed imminently between Cyprus Popular Bank and the Maltese IIP Fund for the bank's 49 per cent stake in Lombard Bank, according to a Cypriot newspaper, but it is not the highest offer.

The newspaper, Alithia, quotes sources as saying that there is another “significantly” higher bid from a Maltese entity – but it did not indicate whether this was one of the original 20 bidders or a newcomer to the process.

The sale started over a year ago, however the process immediately became convoluted: first the bank wanted to buy the shares itself, which was shot down by shareholders at its annual general meeting. Then the bidders who had made a non-binding offer were whittled down to a shortlist – but were never given access to the bank’s confidential financial details, meaning that they could not submit a binding offer.

Bidders were not given access to the bank’s confidential financial details

According to the newspaper sources, the Cypriots have come under intense pressure from the Maltese financial authorities to accept the IIP Fund’s offer.

News of the bid by the IIP Fund was revealed in The Sunday Times of Malta a week ago. The IIP Fund has already invested in Bank of Valletta shareholding, raising many eyebrows, but defended the move as being part of its remit. In this case, the market value of the Lombard shareholding is around €50 million.

Watch: Lombard Bank nationalisation 'should not happen' – former CBM governor

The reported sale of the shares to the IIP Fund was described on Friday as being of “grave concern” by former Central Bank of Malta governor Francis Vassallo, who saw the move as a form of “nationalisation” and “interference by the government in the banking sector”.

The European Central Bank has final veto over the acquisition, according to its banking supervision rules.

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