The government’s decision last Wednesday to indefinitely put the brakes on the Bank of Valletta privatisation process after nearly two years of work is wise and to be commended.

The government said the decision was taken after interest from the international financial services market had not yielded the right type of strategic partner the government had been seeking.

This was done on the basis of Rothschild SpA’s initial market approach. Rothschild were appointed in January 2005 by the government and Banco di Sicilia to assist them with the sale of their respective shareholdings in the bank.

Rothschild’s efforts had yielded interest, but not of the nature that fell within the parameters, strategic and otherwise, that the government was looking for.

The government therefore has postponed the process indefinitely; however, it does not rule out its future resumption, and has thereby kept all its options open.

To the government’s credit, it has always made it abundantly clear that it would not dispose of its BOV shares at any cost and that any such disposal would only be made if a number of criteria were met. These criteria are not based on price considerations alone but they also stipulate that any sale must ensure that any eventual buyer could offer value added – the modern-day buzz word – to the bank and at the same time fit the requirements of the local banking

system.

The government, and rightly so, wants a strategic partner that provides advice and uses its experience to launch new, innovative products, and who can contribute to the bank’s growth and presence within the local commercial and financial sector. The last thing the government or BOV need is a strategic partner that becomes over time a free-rider.

This is the proper approach to privatisation of public assets and the only acceptable route for the Maltese taxpayer who, after all, is part owner as well. This is something that politicians tend to forget.

Privatisation has been a hot issue over the past decade. The sale of Mid-Med Bank in the late 1990s to HSBC Bank, Malta International Airport a few years ago to Austrian interests, Maltacom to Tecom Investments, Sea Malta which was liquidated this year, the Lotto Department to Intralot, and the handing over of operational management of the Freeport to CMA-CGM, have not always been smooth running. There has been a certain amount of resistance to the privatisation exercises amid allegations of incompetence and even vested interests.

The government has been accused in the past of selling short its interests and not getting the right value for what have been important national assets. The government has always denied these accusations, insisting that each and every sale was made on the basis of sound financial advice and market realities.

Despite the obvious pressure to use the proceeds of the sale to cut down further on public debt and to reduce government influence in private sector affairs, privatisation has helped to turn some near-death, bureaucratically-overloaded entities into decently-run private sector enterprises. Privatisation has instilled many new work practices, improved working conditions and trained people who previously had little hope of advancing in their career. Privatisation brings with it efficiency and the all important approach – that of managing an entity, a private sector entity, as if it were a normal business concern.

Therefore, while the privatisation of certain national assets may have been shrouded in mystery and lacking a level of transparency that the public expected, there certainly have been positive results.

What is even more encouraging is last week’s announcement that the government’s share in BOV will not be sold just for the sake of it. And just as encouraging is Industry, Investments and IT minister Austin Gatt’s categorical statement that Air Malta is not up for sale. Another wise decision.

We’re finally getting somewhere.