bov bank of valletta

Bank of Valletta is citing confidentiality clauses in response to fresh questions about its €36 million loan to the company entrusted with running three Maltese hospitals, Steward Healthcare, which has now filed for bankruptcy while top company and Maltese government officials face criminal charges, saying it would be “inappropriate” for it to comment on individual cases.

Following the presentation of the bank’s financial results for the first quarter of 2024, where it generated a profit before tax of €63.7 million, BOV CEO Kenneth Farrugia was asked point blank by whether the recently completed magisterial inquiry looked into the €36 million loan extended by BOV to the private hospital operator.

Mr Farrugia however stuck to the bank’s oft-repeated line that he “cannot comment on customers of clients of the bank.”

Instead, he took the opportunity to draw attention to the bank’s “strong governance structure” overseen by the European Central Bank and the Malta Financial Services Authority.

“We have protocols and procedures around the way that we open bank accounts, the way that we grant loans,” he said.

“Where we have related party transaction through the audit committee, while certain transactions go through the board. You must remember that BOV is a systemic bank, and as a systemic bank we have to deal with six different regulators.

“So there is a significant governance structure beyond the controls, policies and procedures of the bank itself, and this everything needs to be seen in this context.”

The bank is under particular scrutiny because of the Maltese Government’s 25 per cent shareholding. As the single largest shareholder, the Government appoints the chairperson of the board, and has been perceived to carry a certain amount of influence over the bank’s decisions.

Following the conclusion of last year’s magisterial inquiry, which annulled the hospitals deal and paved the way for their re-integration into the state system, BOV’s chief risk officer, Miguel Borg, left the bank.

The curious timing led many to question his potential involvement in the deal, though he steadfastly refused to be implicated, saying that the loan was approved by the risk committee, without his involvement.

It later emerged, from the bank’s annual financial report, that Mr Borg was given a final salary of €265,372 and an ex gratia payment of €150,000.

When asked whether a golden handshake of over €400,000 is normal for top management that resigns voluntarily, the BOV CEO once again declined to comment.

“We apply the same policy when it comes to clients to employees and former employees as well. We cannot comment. I must repeat that everything needs to be seen in view of the strong governance structures we have in place,” he said.


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