APS issues no denial on purported advanced talks of HSBC Malta purchase

HSBC Holdings, the holder of 70% in HSBC Malta, has not denied that APS Bank plc could be an interested party in the potential sale of the bank, billed by HSBC as a “strategic review” of its 70% shareholding in the Malta subsidiary.

APS Bank plc answered only a day later to media reports that it was in talks as to the potential acquisition of HSBC Bank, without any denial in its 4pm company statement.

“All its actions and dealings are invariably guided by the highest standards of good governance and due regard of its various regulatory obligations, including respect for confidentiality,” the bank said.

“The Bank confirms that it will keep the market informed through company announcements whenever necessary and, as has been customary for the past years, Market Briefings where appropriate.”

Ten minutes later, HSBC Bank Malta plc said that it had been informed by HSBC Holdings “that the review process is at an early stage” and that it will consider a range of options. “No decisions have yet been made. HSBC Malta remains focused on running its business and will provide further updates as required.”

Yesterday, HSBC Malta has said it was not aware of any negotiations taking place between HSBC Holdings plc, APS, a small Maltese bank majority owned (55%) by the Maltese Catholic archdiocese.

This prospect has already set the rumour mill going as to which investors could come forward to takeover HSBC’s operations. Business website Whoswho.mt ran with the exclusive story that APS Bank, the church bank, is “set to acquire HSBC Malta” even implying that talks are currently at “an advanced stage”.

On Thursday, HSBC Malta shares climbly gently up to €1.48, after falling an unprecedented 18.5% on Wednesday to €1.36. APS shares on Wednesday climbed 9.6% to 58 cents, before falling to 57c on Thursday.

Financial observers who spoke to MaltaToday described any such move as “a dog trying to bite an elephant”, a basic comparison that illustratres the difference in size between the two banks.

On Facebook, Finco Treasury Management Ltd Director Paul Bonello, posed the question: “Incidentally, from where would APS come up with the money: some new bail-inable and subordinated issues?”

Bonello earlier described the APS rumours as “ultra-unrealistic”.

“People do your proper homework as to the habitual €100 million annual profits of HSBC Malta and to what would be a sensible price earnings ratio in an eventual sale and you will inevitably come to the conclusion that these rumours cannot make sense,” he said.

Bonello called out the lack of clarity in the HSBC company announcement that would have described the purported sale, if media reports are indeed correct, as a “strategic review”.

“It raises so many more questions than it answers. In my opinion its ‘diplomatic language’  is pulling wool over the public’s eyes and inevitably giving rise to some ultra unrealistic rumours as to the local purchasers, in the process causing a drastic – and uncalled for – price fall on some €100 million in ordinary citizens’ life savings alone. Or is this a convenient manner of reducing the purchase price?”

Bonello said that HSBC should reassure the market that it was not desperate to sell out as if this were some court-mandated auction. “The regulators must ensure there is more clarity and visibility in the market. The Maltese investing public has never really understood what is equity investing – that can be dangerous in such situations.”

If APS did buy HSBC it would become the second largest bank after Bank of Valletta and could raise competition concerns. A more pertinent concern would be that Malta loses an international bank and replacing it with a local one, losing the clout of an immediately recognisable and reputable banking institution for investors. Given its international nature, HSBC Malta benefits from correspondent banking through its parent company.

APS Bank plc went public in 2022 when it issued 110 million new shares to the public and was listed on the MSE.

APS was originally owned by the archdiocese of Malta through two companies with a combined shareholding of more than 79%, the diocese of Gozo (18.2%) and the Metropolitan Cathedral Chapter (2.3%).

However, after the share issue, the Maltese archdiocese shareholding was diluted to 55.1%.