Bank of Valletta launches internal inquiry over MP’s allegations

Bank of Valletta has announced it has asked its internal audit unit to investigate allegations made by a Nationalist MP that the bank was issuing loans to untrustworthy individuals and companies with bad credit.

"These are serious allegations," the bank said in a statement, describing the internal investigation as being carried out "with urgency" to determine whether the allegations are well-founded or not.

"The bank will cooperate in full with banking supervisors if they decide to conduct an investigation of their own," the bank said.

Interference in internal operations at Bank of Valletta has resulted in the bank issuing loans to uncreditworthy people and companies, Opposition MP Kristy Debono warned yesterday in the House of Representatives.

“I have heard several reports on people ringing up BOV officials to urge them to issue a loan to certain people and companies, despite the bank having internal doubts about their credit reputations,” she said during a parliamentary debate on a Bill that will set up a Central Credit Register at the Central Bank.

“I am not accusing the finance minister of personally interfering in the bank’s operations,” she insisted. “However, it is clear that people in certain circles of power frequently urge BOV officials to issue loans to certain people or companies as quickly as possible- against the bank’s internal doubts about their creditworthiness, due to their current or previous financial problems with other banks.”  

“We must safeguard the financial sector, and not allow such practices to become the order of the day. We cannot allow BOV’s loan decisions to be based on the personal connections of potential creditors, rather than their creditworthiness.”

Her serious accusations were not referred to by finance minister Edward Scicluna in the first part of his winding-up speech, the second part of which has been postponed to Wednesday's plenary session due to time constraints.

Earlier, PN deputy leader Mario de Marco urged the government to look beyond the current successes of Malta’s financial services industry and think of new niches to attract to the island so as to boost the economy of the future.

“The government earns €300 million annually in revenue through the financial services industry, and the Opposition will stand side by side as it attempts to safeguard the industry against possible threats from outside,” he said. “However, it must look beyond the current successes and start thinking of new sectors to attract.”

He urged government to significant reduce electricity and fuel prices in tandem with the current low market price of oil, so as to boost the competitiveness of the manufacturing industry.

“We don’t blame the government for the current struggles of the manufacturing sector, but it can surely do a lot more to help it out,” he said, while dismissing the government’s insistence that its energy policies are based on “stability”.

“It had used the argument when oil cost $50 a barrel, then when it cost $40, and it is using the same argument now that it costs $30.”