MFSA sheds no light on BOV directive it chose not to publicise

The Malta Financial Services has declined to confirm whether it exempted Bank of Valletta from publicising the fact that it had appealed its own directive to allow La Valette property fund investors the right to pursue their complaints against the bank with the regulator.

MaltaToday can confirm that neither the MFSA nor BOV made public the fact that, on the one hand the regulator obliged the bank to ensure that its 75c share offer to property fund investor was "without prejudice to complainants"; and on the other, that the bank was appealing this directive at the Financial Services Tribunal, demanding the hearing to be held behind closed doors.

The directive was issued on 28 June 2011, but it was only on 4 November that the MFSA publicly revealed that BOV wanted the hearing to take place in camera.

MFSA chairman Joseph Bannister told this newspaper that the authority had nothing to add to its last public statement on the fund, when asked why the regulator had not announced this directive publicly - at a time when property fund investors were mulling on the bank's 75cs offer in a strict 30-day window - and why the bank's appeal was equally not rendered public.

Since the directive was issued on 28 June, the bank had 30 days to appeal the decision.

During the same period, BOV had issued a share offer of 75c to property fund investors who had filed judicial protests against the bank, after the MFSA fined it €347,816 for regulatory breaches in relation to the fund.

While the MFSA said its directive  of 28 June was due to BOV's uncooperative attitude over investor complaints, the bank defended its appeal, saying it was bound by certain banking secrecy rules which it is obliged to respect. "The bank's appeal deals with matters concerning the use and abuse of powers by the MFSA which the bank believed should, in the first instance, be heard behind closed doors.  "The bank is entirely content to be guided by the decision of the FST on this matter, and was indeed surprised that the MFSA appears to be seeking to pre-empt the authority of the independent appeals Tribunal in this regard."

The MFSA is opposing BOV's requests to have the hearing behind closed doors.

BOV's compensation offer to property fund investors who lost their investments was made in the form of a full and final settlement of any claim or dispute. By 30 June, 97% of shareholders had irrevocably transferred their shares in the fund.

BOV said that it was on the last day that MFSA issued its directive, even though it knew beforehand the full details of the offer's terms and conditions.

"The intention behind the original directive of the MFSA was unclear, and the authority was requested by the bank to clarify the scope of the directive. MFSA subsequently confirmed it was not intended that the purported directive should change or modify any contractual relationship entered into between BOV and investors pursuant to the terms and conditions of the offer," the bank said.

The MFSA will be making its findings public imminently on claims of access to sensitive commercial information by employees and directors of the La Valette property fund, which is one of two investigations into the fund, the other being the mis-selling of the fund to inexperienced investors.

BOV has said it looks forward to the conclusion of the MFSA's redemptions and sales practices investigations.

"The bank believes that it has at all times cooperated with the MFSA during the course of its various investigation and enquiries, and does not accept that any delays in the completion of this work can now be attributed to the bank.

"The bank has had occasion to invite the authority to compare the response times of the Authority itself with those of the bank, before seeking to cast aspersions on or to find fault with the bank on this matter."

Last week the Data Protection Commissioner also forced Bank of Valletta, as the La Valette fund's custodian, to allow investors to access their client fact finds. BOV was ordered to release documents that could prove it sold a complex property fund to inexperienced investors against financial regulations, according to some who invested in the failed fund. Investors who sought the information were told by the bank back in September that there was no point in releasing the information given that they had accepted its final settlement offer of 75c per share at the end of June.