Bank of Valletta has signed on to a EUR200 million Syndicated Term Loan facility arranged by Bayerische Landesbank AG, ING Bank N.V. and SANPOLO IMI S.p.A. The loan facility is the Bank’s largest ever.
The facility, fully underwritten by the Mandated Lead Arrangers, was originally launched at EUR120 million, but was hugely oversubscribed and attracted commitments well in excess of EUR200 million, reflecting BoV’s good standing among foreign investors.
The Bank, however, chose to scale the facility - to be used primarily for refinancing and general corporate requirements and comprising two equal tranches maturing after three and five years - down to EUR 100 million.
Addressing guests during the commemorative event, BOV Chairman Joseph F. X. Zahra explained how the two objectives BOV had set out to achieve, namely that of refinancing two maturing facilities and secondly, to extend the maturity profile of part of this facility to five years had been achieved.
With respect to the oversubscription, Mr Zahra comments, “In my view, the market's overwhelming reception, with participations well in excess of that figure, reflects largely the good standing of Bank of Valletta's name, and equally the standing of Malta’s regulatory regime. It goes without saying that Malta’s entry into the EU has played a significant part in the enhanced perception which foreign institutions hold of our country.”
He added that the success of this syndication obviously reflects well on the expertise and professionalism of the arrangers, namely Bayerische Landesbank, ING and Sanpaolo IMI.
Mr Zahra also stressed that the ongoing restructuring process of the Bank’s operations will enable it to meet the challenges emanating from the Single Market. The past five years have seen the Bank re-engineer its operations in order to become more customer centric, creative and innovative, whilst becoming more cost efficient.
He then referred to initiatives taken during the past financial year, namely, the continued investment in the Bank’s IT systems and Internet based solutions, the consolidation of the Bank’s Euro Mediterranean Strategy, the strengthening of credit management systems, and enhancements to the Group’s organisation that promote quick and efficient decision-taking processes.
Finance Ministry Parliamentary Secretary Tonio Fenech, also present for the event, explains, “The financial services sector contributes an average of 10 per cent to Malta’s GDP and employs over 5000 people. Bank of Valletta is one of the prime movers in this sector and throughout the years has proved that it can rise up to the challenges it is presented with.
“Bank of Valletta’s ongoing investment in the new premises and additional IT systems, as well as its continual investment in human resources will ensure further success to the company, not only within the local economy but also in the more global perspective. Bank of Valletta has enjoyed a long tradition of outward-looking policies to extend its business beyond Malta’s shores. It was a pioneer among the local banks to establish representative offices abroad, it played a leading role in establishing a Euro-Med network of banks from the Mediterranean littoral to provide an effective forum for greater cross-border collaboration. Bank of Valletta has also been as active participant in the international syndicated loan market and its track record in this field has been positive indeed. Such syndicated loans contribute significantly to broaden and diversify the bank’s funding sources and enable the bank to look more actively at ways of interfacing Malta’s financial market with the global market. In particular, such syndicated loans provide a stronger basis for local banks to extend credit in foreign currency and thereby being in a better position to cater more adequately for the clients’ borrowing requirements in foreign currency.
The typical longer duration of syndicated loans also enables local banks to achieve a better maturity-match within its assets-liabilities structure. Such ventures are particularly relevant at this historical juncture in Malta’s development and can play a significant role in underpinning the local financial sector’s drive to face up successfully to the challenges and opportunities of EU membership.”
EU accession enhances Malta’s financial services profile
Turing to the opportunities for the financial servioces sector as a result of Malta’s EU accession, Mr Fenech explains, “Malta’s recent membership in the European Union has undoubtedly enhanced the country’s profile in foreign financial markets as well as bringing about tangible new opportunities for our economy.
“In particular, EU Accession means:
• Unlimited access to the EU’s internal market of over 500 million persons whilst reducing technical barriers such as rules of origin affecting one’s operations;
• Taking advantage of the Single Passport, in particular in the area of financial services, to further penetrate the Single Market. This will help further establish Malta as a hub for financial services in the Euro-Mediterranean region;
• Taking advantage of the bilateral agreements the EU has with third countries, such as Canada and Australia;
• While Malta’s EU Accession also means more advantageous funding costs for players within the financial sector.
All this will certainly contribute to increased economic growth for the Maltese economy.
“In order to further develop Malta’s financial services sector, it is imperative to establish niche market opportunities within the Single Market, as in the case of Luxembourg and Dublin with fund management and trustees. To this end, I would like to stress the importance of further strengthening the dialogue between Industry and the Malta Financial Service Authority as well as increased liaison between Maltese financial services sector operators and their EU counterparts.”
“This synergy will make the Lisbon Council objectives ‘to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion by 2010’ a reality.”
Paolo Ricciardi, on behalf of the Lead Arrangers and the participating banks, congratulated BOV for the successful syndication and for the warm welcome that BOV had laid out to all visiting banks, while Ulrich Mattonet presented a memento of the event to Mr Zahra.