An obscuration of the share price on the sale of a 43 per cent stake in Lombard Bank stopped keen investors and corporate fund managers from making a windfall on the Marfin sale last Monday.
Unusual in normal circumstances, Lombard’s company announcement on the sale of the 43 per cent stake to Cyprus’s Marfin Popular Bank was conspicuous by its omission of an important piece of information: the price per share of the transaction.
The international media in fact revealed Marfin had purchased Lombard at a premium – a higher price than its market value – but with investors in the dark as to the sale value, chances of speculative trading were killed.
Marfin purchased its large minority share for €48.3 million (Lm20.7m) – a price 17.6 per cent above Lombard’s quoted share price. It meant Marfin purchased each share for Lm5.58, a premium of 83c8 over the quoted share price of Lombard on closing time Monday, Lm4.74.
The “obscuration” effectively prevented market observers from buying Lombard shares from willing sellers at attractive prices well above Monday’s share price of Lm4.74, to sell them again at a premium just below Lm5.58 and net an easy windfall.
Responding positively to the news of the sale on Tuesday, the market pushed the share price up by 25c on Tuesday to reach Lm5. Only on Friday was the company announcement issued by Marfin, with the price per share included, released by Lombard on the Malta Stock Exchange. The share price closed to Lm5.09 after the company issued a second announcement giving the acquisition price of the shares at closing time Friday.
Marfin purchased the stake in Lombard – Malta’s third largest lender – from BSI SA Lugano’s and other foreign shareholders, and wins the right to appoint two directors.
Lombard was established in 1969 with its registered office in Valetta and six branches. The bank now offers services through Maltapost, of which it is a key shareholder. According to its unaudited accounts, on 30 June Lombard had capital and reserves of €47.2 million, while total deposits and loans amounted to €410.4 million and €331.6 million respectively.