Bank of Valletta Chairman Deo Scerri told The Malta Independent on Sunday that he would not rule out any reputational risk to Malta as a result of the Pilatus Bank situation, but gave assurances that BOV is not being affected.
On Tuesday, Pilatus Bank Chairman Ali Sadr Hashemi Nejad was arrested in the USA on charges of evading the USA's economic sanctions against Iran by sending more than $115 million from Venezuela through US banks. On Tuesday, prosecutors said that Ali Sadr Hashemi Nejad had created front companies and foreign bank accounts to mask his dealings with Iranian businesses in Venezuela. If convicted, Sadr could face a sentence of up to 125 years in prison. The Supervisory Council of the Malta Financial Services Authority (MFSA) has taken certain steps, which include the removal of Sadr from any position he holds at Pilatus Bank. If convicted, Sadr faces up to 125 years in prison.
This newsroom asked the BOV Chairman if BOV is worried about any collateral damage, possibly reputational, following the whole situation surrounding Pilatus Bank.
Scerri replied: "As a bank, I do not think so. As a jurisdiction, maybe I am not competent enough to say, but I would think there would be some negative effect", adding that he would not rule out the possibility of some risk to Malta's reputation.
"As a country, we are punching way above our weight, in terms of economic results, so there would be people who would want to do harm to us. So I would not rule out that people will try to use this as a means of getting back."
"As a bank (BOV), Pilatus does not affect us at all; I don't foresee any negative impact on BOV."
Asked if this could be used as a reason for increased regulation of the banking sector Scerri said that, a few days ago, BOV officials went to Frankfurt for a scheduled meeting with officials from the European Central Bank at which they presented BOV's results and dividends policy.
"I can assure you, it was not an easy meeting", he continued. "It was long and tough. At the end of the meeting they called one of us, said they appreciated our position, thanked us for the presentation and said that they are now much more knowledgeable regarding the bank's plans for the future. As for regulation on the banks, especially on us as a systemically important bank for Malta, regulations are very tough. We follow them and, in spite of the regulations and in spite of the barriers they create, we still manage to make decent profits."