In a statement on its website, which was released yesterday to the Malta Stock Exchange, where the bank is listed, the BoV said its decision not to appeal the Malta Financial Services Authority’s findings was made “in view of the overwhelming acceptance” by shareholders in the collapsed fund of its offer to buy back all the outstanding shares at a price of €0.75 ($1.07) a share.
It stressed that the decision did not mean that either the bank or the fund’s manager, Valletta Fund Management (VFM), accepted that their executives “carried out their work without due diligence, professionalism and care”.
Valletta Fund Management was set up in 1995 and is a joint venture between the BoV and UK-based Insight Investment Management (Global) Ltd.
98% acceptance
Although there had been reports of some reluctance on the part of investors in the fund to accept the bank’s offer to buy back the outstanding shares, it ended up acquiring 98% of them, and this, the bank said, along with “the desire of the parties to bring closure to this matter” convinced it and VFM that there would be “little practical merit in an extended adversarial dispute with the MFSA”.
The fine imposed on the BoV, which some commentators have suggested was not large, was the maximum permitted by Maltese financial law.
MFSA investigations concerning possible mis-selling of the fund are understood to be ongoing.
As reported, a company that had been among the most vocal critics of the way the La Valette Multi Manager Property Fund had been handled, Malta-based Finco Treasury Management, agreed to the share buy-back offer on 30 June, the last day before the buyback offer expired, arguing that it would not be feasible for most of the retail clients who had been invested in the fund to become involved in a court battle that could last as long as 15 to 20 years.
In a statement today, Paul Bonello, managing director of Finco, said he still regarded the BoV’s share buy-back offer as “unjust and immoral”, as it was, he estimated, around 35% less than the shares had been purchased for.
He said he also still believed that the MFSA ought to have urged the bank to withdraw its share buyback offer until all its investigations into the fund, including any looking into possible misselling and insider dealing, had been completed.
“Some of the larger investors who are clients of Finco did not accept the bank’s [share buyback] offer, and will shortly be going to court in an effort to obtain a settlement,” he added.
End of saga?
The decision by the La Valette shareholders to accept the Bank of Valletta’s buyback deal appears to bring to an end a drawn-out saga that affected hundreds of investors and had its roots in Jersey, where La Valette was among the investors caught out by the collapse in 2008 of Belgravia Financial Services Group.
Belgravia started to come apart following the death in May 2008 at age 40 of its founder and chairman, Duncan Hickman, and after a Plus Markets-listed company, First London Securities, rescinded an offer to acquire the company.
At one point Belgravia’s assets under management were said to have approached £1bn, and it briefly made headlines in 2006 after it made a reported £130m to £150m bid for Newcastle United football club.
However, Belgravia’s European Property Fund was just one of around nine funds that were cited by the La Valette investors as having contributed to the La Valette fund’s dismal performance.
The MFSA was established in 2002, when it took over the regulatory functions previous handled in Malta by the Central Bank of Malta, the Malta Stock Exchange and the Malta Financial Services Centre.
