BOV increases share capital from €500 million to €1 billion
Bank of Valletta yesterday held an extraordinary general meeting during which the bank’s shareholders approved the amendments to the bank’s Memorandum and Articles of Association and approved an increase in the share capital of the company from €500 million to €1 billion, subject to regulatory approval.
Addressing the shareholders, chairman Deo Scerri outlined the bank’s strategic vision which focusses on safeguarding the its long-term sustainability. “Good internal governance and adequate risk management are key variables that impinge significantly on the sustainability of the bank’s business model. Therefore, strengthening corporate governance is a major deliverable for the board of directors.”
Recent developments in the regulation of credit institutions at EU level have necessitated a revision of the bank’s Memorandum and Articles. As a systemically important bank, BOV falls under the direct supervision of the Joint Supervisory Team. This team, made up of ECB and MFSA officials, oversees the bank’s business model, internal governance and risk management, capital adequacy and liquidity levels.
Scerri explained that the reviews being proposed in the bank’s Memorandum and Articles emanate from the proposals put forward by the ECB following their thematic review of systemically important institutions.
“The bank’s Memorandum and Articles have never been subject to a comprehensive review since they were drawn up in 1997. In light of regulatory developments and changes in the legal infrastructure, the board felt it was time to review the Memorandum and Articles of the company so that these are in conformity with best international practices,” explained Mr Scerri. These amendments include the setting up of a Nominations and Governance Committee, as well as the appointment of Executive and Nonexecutive Directors on the Board of Directors of the company.
As a domestically important bank with a significant impact on local financial stability, BOV must have greater capacity to absorb higher risk than smaller providers. “Thus, additional capital buffers are required. These are critical for us. Otherwise, the bank would not be in a position to undertake new investment, sustain new lending or distribute dividends to shareholders.” This is why the it is planning to issue new share capital of €150 million over the next eighteen months.
In his concluding remarks, the bank’s chairman summed up the bank’s strategic vision. “The bank will continue to reduce its dependency on the core interest margin. Alternative sources of income are being developed to maintain a business growth in a sustainable and stable manner. As an integral part of the bank’s business plan, this will ensure that profit margins are sustained at the same levels as the best European peers. This will ensure consistent returns for the benefit of our shareholders.”