Lino Spiteri on National Bank saga: 'Not true Mintoff forced shareholders' hand'

Days after a court ruling on one of Malta's longest-running compensation cases was postponed for a further six months, one of the protagonists connected to the National Bank of Malta's nationalisation in 1973 has spoken out on the widely-held belief that shareholders were effectively forced to sign off their shares to Dom Mintoff's government.

Former minister Lino Spiteri, who served under various Labour administrations led by Mintoff, Karmenu Mifsud Bonnici and Alfred Sant, was head of research at the Central Bank when a run on the privately-owned National Bank in December 1972 forced shareholders to sign over their shares - controversially without any compensation - to the government.

Thirty years later, the National Bank of Malta's shareholders are still waiting for a court judgement on their claims for compensation, something that has prompted Spiteri to call on justice minister Chris Said to make it "his urgent business" to see that justice is made.

But Spiteri has also disputed the main grievances of the National Bank shareholders, who have always contended that the bank's solidity was deliberately weakened by government-instigated rumours that prompted a run, in a bid to nationalise the bank - today the Bank of Valletta.

In his Times Business column, Spiteri disputed this version of events, saying that as head of research he had been privy to the reports on the financial state of the bank - a major lender at the time to Malta's fledgling manufacturing, construction and tourism industries.

"The conclusions were worrying," Spiteri said of reports he submitted with the inspection unit at the Central Bank. "So much so that the Central Bank drew the attention of the minister of finance to them."

He described Mintoff, whom NBM shareholders insist aggravated the run by alarming depositors during a television address, as having been "worried by the run and its impact on the business community."

Referring to the Central Bank's role during the run - which is criticised for not having offered its financial strength to assist the National Bank - Spiteri says Mintoff did not feel the bank "should risk own funds by acting as lender of the last resort unless there was adequate security."

Spiteri has also disputed long-held claims by shareholders that they were effectively forced to sign over their shares, as the culmination of a meeting with Mintoff in which the prime minister is said to have demanded to the directors to hand over the bank and not to expect any compensation. The ensuing nationalisation took place at breakneck speed during a parliamentary session, while government representatives knocked on the doors of shareholders' homes to collect signatures.

"The allegation was that Mr Mintoff sent bully boys to bang on shareholders' doors to frighten them into transferring their shares to the government.

"Not so. The individuals who went to plead with shareholders to hand over their shares to the government were members of the bank employees' union, hugely concerned about their job."

The National Bank's shareholders have always insisted that the bank commanded substantial liquidity position that was in excess of 25% of its paid-up share capital, as required by the Banking Act. When a Council of Administration took the bank over in 1973, the final published accounts for the National Bank showed that total deposits had decreased to Lm36 million. With total cash liquidity at Lm10.3 million, the National Bank was still over the mandatory 25% ratio - 28.6% of its deposits, were liquid cash.