Bannister under pressure, Nemea depositors mull legal action

Pressure is mounting on the longstanding chairman of the Malta Financial Services Authority, Joseph V. Bannister, as the Nemea Bank debacle and recent accusations over his offshore fund directorships took their toll on the regulator.

Bannister yesterday did not comment on a request from this newspaper to confirm or deny his intention to resign.

And earlier this week, he also ignored a request for comment after having reportedly declared holding a Nemea Bank account, to other members on the regulator’s board. No wrongdoing is being suggested, but Bannister did not answer questions on warnings from the European Central Bank on Nemea bank over the past 12 months which may not have been treated with urgency.

Bannister was also not present for two important meetings this week, sources at the regulator told MaltaToday. Last week he also had to fend off accusations from education minister Evarist Bartolo of having a conflict of interest as a director on funds registered in the Cayman Islands. “Bannister is the chairman of an authority in Malta which has the role of regulating and supervising the financial industry. Forming part of the same industry through directorships of collective investment schemes registered in the Cayman is a serious conflict of interest,” Bartolo said.

But Bannister had retorted: “The issue was raised five years ago and the matter was closed. Both the then Prime Minister and the Leader of the Opposition know the facts. I do not have a company in the Cayman and neither do I have any funds in the Cayman.”

Nemea depositors mull legal action

Warnings on the “serious regulatory shortcomings” inside the online-only bank Nemea, which is headquartered in Portomaso, have been pouring in from the European Central Bank for the past 12 months. It was only on Tuesday last week that an urgent meeting was convened by senior officials from the finance ministry, the Central Bank, and the Malta Financial Services Authority on Tuesday evening, to place Nemea Bank under administration.

MaltaToday understands that political pressure was also brought to bear upon the ECB to finally take action, when Belgian and Dutch depositors were being targeted by the online bank with some of Europe’s highest interest rates.

The direct bank is owned by its two Finnish co-chairmen, Mika Lehto and Heikki Niemelä, and its directors include former prime minister Lawrence Gonzi and Joseph F.X. Zahra, recently appointed to head a special finance commission for the Vatican by Pope Francis.

Pricewaterhouse Coopers Malta has now been appointed to administer the bank and take charge of its assets, but deposits from customers will be halted and withdrawals capped at €250.

Nemea depositors have set up a website in a bid to disseminate as much information as possible on the status of Nemea Bank since it went into administration. One depositor has told MaltaToday that foreign clients are considering legal action to safeguard their rights.

According to the news-nemeabank.com, depositors have been kept in the dark about the exact status of the bank, whose solvency has not been put into doubt.

“No-one can touch funds, pay bills, and clients are in the dark when it comes to savings and funds. This is not only putting companies in great economical [sic] risks, but it does also harm thousands of individuals who just followed up government advice: bring your money to a bank.  The same government which gave this advice, now also advised to close the bank. What will happen with our money? No one knows on this moment. What will happen when you stalled your funds at Nemea Bank and you should pay bills? Again no one knows,” the depositors’ website says.

The website claims that Nemea Bank has been unwilling to take all calls from depositors or offer any detail in their standard-reply emails.

“We have tried to contact Nemea Bank, MFSA, and the ECB. No one is willing to share any useful information. The only thing they will do is take your name and your number, and make the false promises they will call you back. Of course you will not hear from them,” the website states.

The purported depositors also say they want to create an association to draw up an inventory of interest to regain control over the funds, present “strong objections” against a possible haircut, take legal action and file for compensation on damages.

In a post uploaded yesterday, the same website asks whether former prime minister Lawrence Gonzi can “please advise how the Nemea Bank account holders will recover their funds? Could you kindly explain how you have been managing the bank?”

In 2015, the bank started marketing its 4% term deposits to attract 30,000 clients in the Belgian and Dutch markets. The news prompted questions in Dutch financial newspapers as to whether the high interest rate would be redolent of another Icesave crash.

The bank is owned by Nevestor SA of Belgium (40%) while the rest is split between Ninovan Ltd and Shilmore Ltd of Cyprus (30% each), ultimately jointly owned by its founders, Heikki Niemelä and Mika Lehto.