Republic Day brings memory of National Bank run

Shareholders of the defunct National Bank of Malta have marked the 40^th year since the Maltese government suspended the private bank's licence in the wake of a run on the bank.

The main shareholders, many of them members of the Maltese nobility, have been waiting four decades for a compensation case in the courts of Malta to be concluded, with judgement being postponed ever since.

The NBM licence was suspended on 11 December, 1973, announced by Prime Minister Dom Mintoff on television after a week-long run on the bank where Lm2.5 million was withdrawn by depositors. Shareholders insist that the Central Bank refused to act as a lender of last resort, to bolster it reserves. Over the course of the run, the shareholders were forced to sign over their shares to government without compensation, and later in parliament the bank was placed under controllership. It was later nationalised as Bank of Valletta.

The Labour government has not excluded holdings talks with the bank's former shareholders, as  part of an out-of-court settlement to settle dues.

Although the case has been deferred for judgment, Mr Justice Joseph R Micallef, who is presiding over the case, has been postponing handing down judgment.

Shareholders have consistently argued that the run was engineered specifically to weaken the bank and provide the government with an excuse to nationalise it in the public interest.

They also claim that the Central Bank had failed to intervene as regulator when it had a legal obligation to do so.

They say that individual shareholders had been intimidated into signing away their shares for no compensation.

A court case filed by shareholders in 1977 is still ongoing, forcing Dr Bonnici to distance himself from the lengthy proceedings.

Labour leader Joseph Muscat had held a meeting with Jeremy Cassar Torregiani, the grandson of the National Bank of Malta founder, prior to the March elections.

In 2005, informal discussions between investments minister Austin Gatt and NBM shareholders floated the prospect of an Lm8 million (€20 million) compensation package offered to the former shareholders who signed off most of their shares under duress thirty years ago.