Bishops wash their hands from APS Bank's talks to buy HSBC's Malta subsidiary

The bishops of Malta and Gozo have done a Pontius Pilate over APS Bank’s management’s decision to engage in talks with HSBC for the takeover of its Malta branch. 

Both washed their hands from the controversial decision when asked for a reaction by MaltaToday despite concerns expressed privately. 

A spokesperson for the Maltese Curia told MaltaToday Archbishop Charles Scicluna is not involved in the operations of APS, adding that he has “full confidence in the bank’s board and management”. 

Similarly, a spokesperson for Gozo Bishop Anton Teuma said the bishop “has no comments to make in this regard”. 

The Archdiocese of Malta is the majority shareholder in APS Bank, owning a 55.2% stake through its wholly owned company, Arom Holdings Ltd. The Diocese of Gozo owns 12.7% of APS with the rest of the shareholding held by the public and institutional investors. 

News that APS is in talks to buy HSBC has caused a stir in ecclesiastical circles but so far there has been no public direction from church leaders. 

Nonetheless, sources close to the Curia have told MaltaToday that Gozo Bishop Anton Teuma has privately expressed disagreement with the possible deal, while the Maltese archbishop set up a group of experts to advise him on the matter. 

“The predominant advice Charles Scicluna appears to have received was against the deal and it seems the Archbishop is of the opinion that if the bishops have no common agreement between them, the deal should not go through,” the sources said. 

The private position adopted by the bishops jars with the enthusiasm shown by the APS board and management, which is in favour of the takeover. 

It transpires that it was HSBC that first approached APS over a possible sale (Photo: James Bianchi/MaltaToday)

The sources said it was HSBC that first approached APS several months ago and the Maltese government was aware of the negotiations. 

Last week, APS did not deny reports it was engaged in “advanced talks” to acquire HSBC Malta after the latter said its parent company was conducting a “strategic review” of its business on the island. 

For years now HSBC has been pulling out from several markets internationally to concentrate on its business in Asia. The announcement that HSBC was considering all its option in Malta came as no surprise. 

However, financial analysts were surprised by the persistent rumours it was APS Bank, a smaller financial institution, that was interested in acquiring HSBC Malta.

READ ALSO: Stockbroker Paul Bonello | ‘Unlikely APS has firepower for HSBC buy’

HSBC Holdings, the parent company, owns 70% of the shares in its Malta branch with the rest being held by the public. 

But financial observers speaking to MaltaToday noted that any deal brokered by APS management will require shareholder approval. 

APS’s Memorandum and Articles of Association, states that any acquisition the bank may make will require shareholder approval in an extraordinary general meeting. Any resolution proposing that APS buy HSBC Bank Malta would need 75% backing from shareholders to pass. 

“Any offer APS will make, or agreement it reaches with HSBC, will have to be cleared by its shareholders first, apart from regulatory approval, and the Archdiocese of Malta on its own has the power to block the move given its majority shareholding,” the observers noted. 

Furthermore, APS Bank will have to raise in access of €300 million to acquire HSBC’s 70% shareholding based on current market data. It is not an insignificant amount for a bank the size of APS. 

Observers noted that the APS board is only authorised to issue bonds worth €50 million without shareholder approval. “Any bond issue to raise capital for the purchase of HSBC will have to be approved by shareholders,” the observers said. 

According to APS’s annual report for 2023 Arom Holdings Ltd, wholly owned by the Archdiocese of Malta, and the Diocese of Gozo are the only two shareholders holding more than 5% in the bank.

READ ALSO: HSBC’s departure, Malta’s strategic interest and ‘a dog trying to bite an elephant’