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Karl Schembri
Former Nationalist Finance Minister and now Malta’s High Commissioner to the UK, George Bonello Du Puis, disagrees with government’s plan to sell its shares and those of the Banco di Sicilia in Bank of Valletta to a foreign strategic partner.
Speaking to MaltaToday’s sister paper, The Malta Financial and Business Times, Bonello Du Puis said: “My policy remains the same. The bank should be owned by the people.”
Bonello Du Puis had piloted the government’s popularisation drive in the early nineties which saw the sell-out of up to 60 per cent of Bank of Valletta shares to the Maltese public.
“I believe the people should own the bank’s shares and reap the benefits from that ownership, not the foreigners,” Bonello Du Puis said. “I don’t approve of any other policy.”
Appointed High Commissioner to the UK in 1998, Bonello Du Puis was instrumental in privatising the banks through what was then called a ‘popularisation programme’ in which the public was asked to buy shares in BOV.
Former Finance Minister John Dalli believes that a ‘middle road’ should be contemplated in order to accommodate a foreign institution that can guarantee BOV remains ‘Maltese’ in its culture and philosophy.
“A strategic partner can bring certain benefits such as new technologies and new financial products. I always said BOV should remain a ‘Maltese’ bank. When HSBC was brought over to Malta we said this was an important strategy for Malta’s presence in the global financial community and to have high financial standards.
“As we know the financial sector in Malta has improved greatly. Today the question is one of ascertaining that we have a bank that is ‘Maltese.’ I’m not saying HSBC is not like that but in this issue we have to consider the question of governability, and that any partner will retain a certain discipline in the long term. The MFSA assures this state of affairs whoever the shareholder is, as it is the supervisor and runs constant reviews of our banking operations.”
Economist Karm Farrugia expressed his outright disagreement with the government’s plans.
“I’m totally against selling the majority of shares to foreigners, this is madness,” Farrugia said. “It would create a duopoly, whereby HSBC and BOV will be controlling our economy and making all the profits, reinvesting Maltese people’s money abroad.”
Farrugia said the government’s previous talk about HSBC attracting foreign investment to Malta proved to be untrue as that never happened.
“We should go for the popularisation option,” Farrugia said, “or else turn BOV into an investment bank.”
According to last Sunday’s Times, BOV Chairman Joseph F. X. Zahra tendered his resignation because of his disagreement with the government’s plans about the way the bank was about to be privatised.
According to anonymous sources quoted by The Times, “Mr Zahra's position was that he disagreed with the way the bank should be privatised. The government and Banco di Sicilia are planning to sell their respective shareholding, amounting to 40 per cent of the total, to a strategic partner, likely to be a foreign bank, which effectively means this foreign investor will effectively control the bank. Mr Zahra believes that in the local economic scenario, where the other major bank is already controlled by a foreign bank, it was not ideal for the BoV also to be controlled by a foreign institution.”
Zahra, however, categorically denied the claims in a separate story on MaltaToday last Sunday.
“I’ve headed the bank for the last six years on the understanding that government would privatise it,” Zahra said. “My resignation had nothing to do with that, nor with the Brindisi-Freeport issue. It was for totally personal and private reasons.”
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