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Best practice

I refer to the article by Edward Rizzo (‘BOV’s midsummer shock’, August 9) and would like to clarify the bank’s position in respect of two particular points raised in the said article.

The first point refers to the efficacy of the bank’s external communication. Rizzo expresses disappointment at what he deems to be “ineffective communication” by the bank to the market in relation to the Falcon Funds case. He believes the bank failed to explain clearly the implications of this case.

The bank had disclosed details of this case in its annual report for 2017, a fact acknowledged by Rizzo who, however, opined that most shareholders would not be assumed to read the full report and that more direct communication to the market was warranted.

While I agree that the man in the street might not read through the entire report, financial analysts are certainly expected to do so and to take such information into account when offering advice to clients. The annual report is the main channel of communication between any listed company and the market and is thus a heavily-regulated document.

The bank has gone on record, during the presentation to stockbrokers, last August 1, that there have been no further developments in this case since last December. There is, therefore, nothing further to communicate to the market as at today.

The second point refers to last week’s rating action by Standard & Poor’s on Bank of Valletta. The bank has already amply explained that the downgrade was not caused by its financial results but by heightened “industry risk”.

S&P stated clearly that recent developments in the local sector, with specific reference to the Pilatus Bank case, had, in their opinion, increased the risk profile of the entire local banking sector. This view was reflected in their consequent downgrade of BOV, the largest Maltese bank and the only core domestic bank rated by S&P.

Rizzo’s statement that “last week’s announcement by BOV (of the interim financials) brought about an immediate reaction by the international credit rating agency Standard & Poor’s” is therefore inexact. The rating was not influenced by the litigation provision made by the bank.

I would like to reassure the public that the bank will always communicate any and all developments which may have a material impact on its financials or on its share price, as it is indeed bound to do by law.

Bank of Valletta has always and will continue to apply best practice in the interests of the bank itself, of its stakeholders and of the wider market.

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