Gerald Fenech

During the 31st annual general meeting of Bank of Valletta held on Friday, an election for directors was held. Following this election, the Board of Directors of Bank of Valletta will be composed as follows: Roderick Chalmers, Chairman, Joseph Borg, Dott. Roberto Cassata, James Grech, Franco Masini, Marlene Mizzi, George Portanier, Norman Rossignaud and Franco Xuereb

Mr Chalmers and Mr Grech were appointed by the government in representation of its shareholding. Dott. Roberto Cassata was appointed by Banco di Sicilia in representation of its shareholding. The other six directors were elected during the annual general meeting.

Bank of Valletta announced that it had made a pre-tax profit of Lm18.6, a 25 per cent increase over last year.

Addressing the bank’s annual general meeting for the first time, newly-appointed chairman Roderick Chalmers described the results as “impressive”. He added that the bank would be paying a dividend of 10c per share to all shareholders, which represents a 45 per cent increase over last year when the interim dividend of 6c is taken into account.

Mr Chalmers heaped praise on former BOV chairman Joseph F.X. Zahra for his outstanding contribution and work done over the past six years in the bank’s re-organisation. The BOV chairman also said that there would be a continued focus on the provision of high quality services, thus translating into better return for shareholders.

Focusing on future challenges, Mr Chalmers said there were various factors that would affect the bank’s performance in the future. He said that tourism was currently in a state of transformation and added that the EU open market was transforming Malta’s economy from a low cost manufacturing one to a high service added value one and this would definitely impact on the bank’s performance.

Commenting on the privatisation issue, Mr Chalmers argued that the bank should be involved in the process with regard to the sale of shares by the government as this would enable the bank to identify the better course to take in today’s competitive economic environment.

BOV’s chief executive officer Tonio Depasquale focused on the bank’s strategic and financial performance. He revealed that earnings per share were up to 21.1c with corresponding increases in operating income, net interest and non-interest income. Mr Depasquale added that BOV’s subsidiaries had also done well and that deposits and loans were also on the rise.

Mr Depasquale said the bank was constantly upgrading its services and referred to the progress made in electronic banking, telephone banking and other innovative systems. He said the bank was preparing for the adoption of the euro and referred to the administration of an important bond issue by the European Investment Bank, which had been entrusted to the bank, indicating the high esteem in which BOV is held internationally.

He said the bank was committed to continue to diversify its wide range of services while maintaining a prudent cost-efficient strategy. Mr Depasquale revealed that the bank’s new centre in Santa Venera should be completed by mid-2005 and will provide the centralisation of services that will result in more efficiency and further cost savings.

Shareholders comments

As expected, Bank of Valletta’s annual general meeting generated much debate over the resolutions taken by the government and Banco di Sicilia to sell their shares to a strategic investor.

Here is a short report of some of the main comments and points raised by the shareholders present at the Mediterranean Conference Centre.

A shareholder asked if the bank was conducting a study on the impact of the ERM II mechanism on the bank’s operations. On the privatization of the government’s 40 per cent share in the bank, he asked if the sale would be available to the Maltese public and who would appoint the chairman.

Mr Chalmers said the bank was conscious of its responsibilities about joining the ERM II mechanism and would be acting prudently to guarantee shareholder value.

Lino Callus enquired about the figure of impairment losses of Lm13 million for this year and asked if these were comparable to other bank’s benchmarks.

Mr Chalmers said the bank expected impairment losses, as there is no such thing as a risk free environment, adding that the bank was keeping this area under constant review. However, he said the board was not content with the level of impairment losses, which were relatively high and the bank would continue strengthening its credit operations.

The resolution regarding the bank’s directors was approved by a show of hands.

Mr Chalmers then moved the resolution regarding the payment of a dividend of 10c per share.

Joe Zrinzo said the payment was rather meager when compared to the dividend of 45c per share being paid out by HSBC. The chairman said that in the current economic environment, the bank’s directors had agreed that the payment reflected reality. The second motion was also approved.

On the third resolution regarding the appointment of auditors, Saviour Debono asked whether it was possible to initiate a rotation system with Mr Chalmers responding that the bank was looking into the possibility of such a system but was satisfied with the performance given by Deloitte & Touche over the years. The resolution was also approved without much ado.

The next resolutions dealt with the privatisation of the bank and were presented by the Maltese government and Banco di Sicilia, which hold 40 per cent of the bank’s shareholding.

Mr Chalmers said these resolutions deal with the initiation of a process to appoint an advisor for these shares to be sold to a strategic partner. He added that the board will make sure that a due diligence exercise will be carried out in all phases of the process.

Ray Falzon said the letter received by BOV shareholders from the government and Banco di Sicilia had indicated that the shares would be sold to a strategic investor and not a strategic partner and requested clarification on this matter.

Mr Chalmers answered that the resolution was not presented by the board but by the parties selling their shares.

Another shareholder expressed the wish that the shares would be sold to Maltese investors but Mr Chalmers said this was outside the remit of the board of directors.

Mr Zrinzo enquired whether the shareholders were being asked to give carte blanche to those who wished to buy these shares without a specific letter of intent. He reflected on the sale of shares that HSBC had bought from BOV, which the bank had held in Mid Med Bank, but here Mr Chalmers reined him in.

The BOV chairman said he does not agree that the bank should give a carte blanche to anyone for the sale of the government’s and Banco di Sicilia’s shares but also conceded that such a process does create a level of uncertainty.

Another shareholder requested clarification if confidential information would by passed on to a contractual party or any other party.

Mr Chalmers said the board would do its utmost to ensure that any sensitive information would be made available to bona fide parties and no one else.

Charles Scicluna asked whether the privatisation process would affect Middle Sea Insurance. Mr Chalmers said the bank owns around 20 per cent of the shares of that company and added that he did not feel that the resolutions would have any impact on the operation of Middle Sea Insurance.

Another shareholder said he did not agree with the resolutions, as these were too generic in their wording and would have a detrimental effect on minority shareholders and the bank’s clients. He said conditions for divulging such sensitive information should not be the sole remit of the board.

Mr Chalmers said it was incorrect to state that the three directors appointed by the government and Banco di Sicilia had access to sensitive information. The resolution was then postponed to the end of the meeting after several shareholders voted against.

Another shareholder said this meeting had approved a set of accounts which were approved by Maltese law and by professional auditors and asked why these resolutions to divulge sensitive information were being proposed when there was more than enough information in the accounts themselves.

Mr Chalmers reiterated that the resolutions had not been presented by the board but by the shareholders who wished to divest their shares. He added that it was practical to divulge sensitive information to those bona fide strategic investors when these were involved in the purchase of substantial amounts of shares.

The sixth resolution was also postponed to the end of the meeting as a show of hands verified that a number of shareholders were against the proposal.