BOV passes EU stress test: "well capitalized bank" - Chalmers

Bank of Valletta has passed the stringent EU stress test. In a company announcement, BOV Group explained that the Committee of European Banking Supervisors (CEBS) reeased the results pertaining to a stress test carried out on 91 leading European banks, in collaboration with the European Central Bank (ECB) and local authorities.

23 July 2010, 12:00am

1 min read

The results show that BOV Group enjoys strong capital buffers. When the bank’s consolidated balance sheet and income statement were stressed in accordance with the parameters set by CEBS and the ECB, its Tier 1 ratio, which is an international indicator of balance sheet strength, decreased by 1.2 percentage points, reaching 9.3%. This is one and a half times higher than the 6% “pass mark” set for this exercise and more than double the statutory minimum ratio of 4%.

BOV Group Chairman Roderick Chalmers said that these results “confirm that BOV is a well capitalized bank by all international standards, and that the capital buffers we hold are more than enough to see us through situations of stress.

“The strength of the Groups regulatory capital position is the direct result of the quality of our assets, and our prudent dividend policy, wherby over the years we have sought to balance capital conservation with an attractive dividend return for our shareholders,” he said.

Roderick Chalmers added that the bank carries out internal stress tests on a regular basis as part of its risk management process, and that capital buffers are monitored continuously by the board and by executive management,

“Capital is the motor which drives the bank’s business, and the prudent and efficient management of capital is one of our top priorities,” Chalmers concluded.

The results for Bank of Valletta plc stress test can be accessed through the bank’s website

Mark Fenech •

But while BOV passed its EU Stress Test, it did not do the same on Wednesday 21st July during the third consecutive extraordinary meeting of the Shareholders of its Property Fund. These Shareholders had seen their shares bought between €1.10 and €1.16 (with the BOV professionals and multi managers promising high yields to its maltese shareholders-as the property market is always increasing), to as low as €0.51 of which only about 50% is liquid. The Shareholders did not accept that the shares had gone down due to the market negative movements, but due to the fact that one of the Funds that BOV had invested in, i.e., Belgravia - had met charges of fraud by its own directors, this as reported in earlier editions of the Guardian and the Times of London. The Shareholders felt that their interests were not properly safeguarded by both the local and foreign multi managers of this fund. The MFSA was also criticised for it did not inform the local shareholders of the Fund,what was going on, when it was its duty as the local Financial Regulatory Authority to safeguard the local shareholders and only approved what was recommended by BOV without guiding shareholders how they are to proceed in such a disastrous situation, where many shareholders lost a good number of thousands of EUR. Local shareholders do not seem to have anybody to safeguard them.