BOV directors not at fault in Deiulemar bankruptcy case – chairman

The administrators of Bank of Valletta have no fault with the bankruptcy case of Deiulemar in Italy, which forced the bank to pay an out of court settlement of 182.5 million euros, said Thursday the bank’s president, Gordon Cordina.

Addressing the bank’s virtual annual general meeting, Cordina said an internal investigation by BOV into the trust services offered in relation to shipping giant Deiulemar found no wrongdoing on the part of the bank. of any of the bank employees.

He was responding to a question from a shareholder about whether one of the directors should take responsibility for the fiasco. The shareholder also suggested withholding part of the directors’ emoluments as a form of discipline.

Shareholders of the collapsed shipping giant were found guilty of fraud and seven members of the company’s founders were jailed by an Italian court in 2014.

BOV had taken over a trust that held €363 million in the company’s assets in 2009. When the company went bankrupt, bondholders whose savings were wiped out turned to BOV.

The bank was due to pay 370 million euros to Deiulemar shareholders after losing its lawsuit in February in Italian courts.

Cordina said the bank filed an appeal in March and later engaged with Deiulemar conservators to explore the possibility of an out-of-court settlement, despite making strong legal arguments to win the case.

He said that since the settlement was half the amount she could have been ordered to pay had the appeal not been decided in her favour, the bank did not consider it necessary to seek an independent professional opinion on the question.

Responding to another question, Cordina explained that the bank had placed more than 363 million euros in the hands of an independent entity in 2018 as a precautionary guarantee, following a court order in Torre Annunziata. .

He stressed that the deal, which was reached without admission of liability, will put the bank in a more secure capital position.

Cordina said that since the litigation with Deiulemar’s creditors was closed, there has been a significant positive response in BOV’s share price, rising more than 26% to 99c per share.

Asked about the payment of dividends, he explained that following the payment in January of an interim dividend – a gross payment of more than 15 million euros – the board had decided to adopt a cautious approach and to not to recommend the distribution of a final dividend for the financial year. 2021, given the uncertainties of recent months.

However, he said that with the Deiulemar case behind it, the bank can now pave the way for a stable dividend and return to stronger and more sustained levels of profitability.

He said that despite the challenges, the bank continued to benefit from strong and much-needed capital to continue to meet new challenges, adding that the digitization of processes, the reorganization of the balance sheet and the improvement of the customer experience were essential to generate long-term profitability.

Speaking to shareholders for the last time, in view of his imminent departure from the bank, CEO Rick Hunkin said the bank had delivered a strong financial performance, with pre-tax profit surpassing the 80 million euro mark .

He recalled that over the past year the bank has operated in a persistent pandemic environment, with sectors of the economy that have been affected by market jitters due to Malta’s gray listing, and more recently in the uncertainties caused by the geopolitical instability derived from the war in Ukraine.

The shareholders also approved an annual increase of 2,000 euros in the salaries of the chairman and the directors. Cordina said it was “minimal” and salary levels were “moderate” compared to similar institutions overseas. He said it was also important for the bank to retain talent on the board.

The bank is holding a physical briefing for shareholders on June 15.

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Janet E. Fishburn