New controller appointed to Nemea Bank for liquidation

The MFSA has appointed Michael Spiteri Bailey as the controller for Nemea Bank to wind up and liquidate the company.

Price Waterhouse Coopers (PwC), that formally occupied the role of competent person, will have its appointment terminated.

The bank was placed under the control of PwC in April 2016 after the European Central Bank flagged serious regulatory concerns inside the bank.

Almost a year later, the MFSA asked the ECB to withdraw the banking license granted to Nemea Bank.

Former prime minister Lawrence Gonzi was a director of the bank when PwC took over. When placed under the audit firm’s watch, the bank held €62 million worth of client deposits.

By 2020, the bank still owed its customers €13.2 million in deposits.

Despite having its license withdrawn in 2017, the liquidation process has been slow due to pending appeals against the decision to shutter the bank.

Independent candidate Arnold Cassola filed a complaint with the Ombudsman over the trapped funds. Eventually, Ombudsman Anthony Mifsud ordered the MFSA to make sure PwC regularly updates its depositors or interested parties on the bank’s financial situation.

Nemea specialised in providing banking and investment services to individuals, businesses, institutions and high net worth individuals across the European economic area.

As an online-only bank, Nemea operated with lower costs and overheads compared to traditional banks, while earning income by generating interest, fees and commissions, and financial income.

Clients’ deposits were invested by the bank in loans, deposits, and other fixed income instruments and other low risk securities.

Nemea Bank is in turn owned by Nemea PLC, itself owned by Nevestor SA of Belgium (40%) and Ninovan Ltd and Shilmore Ltd of Cyprus (30% each). The bank is ultimately jointly owned by its founders Heikki Niemelä and Mika Lehto.

There are several banks currently under the control of an MFSA-appointed administrator. Last May, PwC was appointed as the competent person to oversee the affairs of shuttered Pilatus Bank.

Shortly after, the bank was hit with a €5 million penalty by the FIAU and later charged with money laundering.

Satabank was also placed under the control of Ernst & Young after millions of criminal proceeds were suspected of having passed through the St Julian’s bank.  The FIAU initially fined Satabank a reported €3.5 million for various regulatory breaches, but this was eventually shaved down to €851,000.