Government plans to sell Lombard Bank share to strategic partner not public

Last week, Lombard Bank chairman Michael Bonello a former governor of the Central Bank said it was in the best interest of all stakeholders for the National Development and Social Fund to divest its shares to the public. Shares held in Lombard Bank by the fund financed by the sale of citizenship should be sold to the public, the bank’s board of directors insisted.

“The board believes that it would be in the best interests of all stakeholders if the shares were to be widely spread among the public as this would ensure that the bank remained focused on serving the Maltese economy in the long-term,” Bonello wrote in his introduction barely eight months after the Government fund bought 49% of the bank’s shareholding.

But a senior and very reliable government official told BusinessToday that Government will only sell to a strategic partner and not the public.

The same source expressed concern that Bonello’s announcement was made through a remark in the annual report. 

“The NDSF fund is essentially a government body, we have no directors on Lombard bank and no say.  It would be interesting to see the operation of the bank but this is beyond the scope of our presence of shareholders now.

“I think that we should recall that the National Development and Social Fund, a sovereign fund financed by proceeds from the Individual Investor Programme, a scheme selling Maltese citizenship to wealthy foreigners, bought the 49% shareholding held by Cyprus Popular Bank. The share purchase was finalised in August 2018 only eight months ago,” the same source explained.

In 2013, Cyprus Popular Bank was placed in resolution, kicking off a process to dispose of certain assets including its shareholding in Lombard Bank.

In November last year, the NDSF, which became the largest shareholder in Lombard, said it had no interest in increasing its stake in the bank and would not influence the institution’s direction. It also reiterated its commitment to sell the shareholding when the market conditions are right.

But no one in Government believed that this would only come about so soon.

In the annual report Lombard is seen as having 1,413 shareholders, who hold 44,177,914 shares.

There are 680 stakeholders with 5,001 shares and over, while 152 shareholders hold between one and 500 shares.

The Group recorded a pre-tax profit of €13.8 million. The main driver was the performance of Lombard Bank Malta p.l.c., since MaltaPost p.l.c., the other member of the group, registered a small decline in profitability.

The bank’s operations during 2018 saw an increase in the profit before tax to €12.6 million. This prompted the board to recommend a gross dividend of 5c per share.