News | Sunday, 29 March 2009

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Controversy blocks publication of Bank of Valletta history

Matthew Vella
The controversy surrounding the forced nationalisation of the National Bank of Malta, precursor to the Bank of Valletta, still casts a shadow over the financial institution 30 years after the event – to the extent that a history of BOV, commissioned by the bank itself, has been withheld for publication.
Historian Henry Frendo was commissioned to write a 200-year history of the illustrious bank, from its inception as the ‘Anglo Maltese Bank’ in 1809 to the present, but the book but has not yet seen light of the day due to legal advice against its publication.
Frendo spent six years compiling the history of Malta’s banking development, with exclusive interviews with banking veterans who shed some crucial light on the goings-on behind the nationalisation of the National Bank in the 1970s.
According to former BOV chairman John C. Grech, the bank’s lawyers had advised the bank’s directors against publication since the book carried interviews with people still claiming compensation from the government for shares they held with the National Bank.
“The lawyers had advised us that since the claims were still sub judice, it would be incorrect to publish interviews with people who might have had an interest in making certain claims that would interfere with the ongoing court cases,” Grech said.
The National Bank of Malta was hit by a run on its reserves back in December 1972, but its original shareholders claim the Central Bank of Malta had refused to act as lender of last resort, and even blocked attempts by Barclays Bank to loan money to the NBM. In four days, the run on the bank saw enormous withdrawals totalling at least Lm2.5 million.
Around 350 shareholders lost their shares after they were forced to sign them over to the government, without compensation. Prime Minister Dom Mintoff had threatened in parliament that if the bank’s directors refused, he would remove the limited liability of the banks’ shareholders, extend it beyond the bank’s capital to their personal assets, and withdraw the four million pounds in parastatal funds which were deposited at the bank.
The case concerning the compensation to shareholders by government has been running since 1972 and so far has not yet been concluded.
But in 2005, informal discussions between Investments Minister Austin Gatt and the National Bank shareholders were held over an Lm8 million compensation package to the shareholders.

History of the bank

1809 The Anglo Maltese Bank set up at St Paul’s Street, Valletta

1812 Banco di Malta set up at St Dominic Street, Valletta

1812 B. Tagliaferro et fils, wholly owned by Biagio Tagliaferro, a Genoese grain merchant, is set up at St John Street, Valletta

1830 Joseph Scicluna et fils (later Sciclunas Bank in 1926), owned by the Marquis John Scicluna, is set up at Old Theatre Street, Valletta

1946 Anglo Maltese and Banco di Malta merge into the National Bank of Malta

1949 Sciclunas Bank joins National Bank of Malta Group

1969 Tagliaferro Bank merges with the National Bank

1973 Run on National Bank

1974 Bank of Valletta takes over business with Lm43 million in assets, 27 branches, registering Lm1 million in profit after nine months

1975 BOV sells 20% of its share capital to Banco di Sicilia

1990 Public ownership of BOV increases to 28%

1995 Government sells more shares to the public and reduces its stake to 25%

mvella@mediatoday.com.mt

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