MFSA asks ECB to withdraw Nemea Bank licence, prohibition on withdrawal of deposits also put in place

The Malta Financial Services Authority (MFSA) has proposed to the European Central Bank the withdrawal of the licence of the Maltese Nemea Bank and has also put a hold on withdrawals of deposits from the bank.

The Maltese bank had been marketed as Europe’s first online-only bank, offering retail, business, investment and private banking.

In a statement on Friday evening, the MFSA said that, despite repeated requests, the bank has to date made no tangible progress on the Authority’s demands to fulfil regulatory requirements.

The MFSA said in a statement: “Given that this situation cannot be sustained indefinitely without undue detriment to depositors, the Authority has now decided to propose to the ECB the withdrawal of the licence granted to the bank under the Banking Act, Cap 371. This measure has been taken by the Authority in the interests of the depositors of the bank.”

The MFSA explained that, pending the ECB’s final decision on the licence withdrawal, a prohibition on the withdrawal of deposits has been put in place with immediate effect as a precautionary measure to safeguard the assets of the bank and to ensure the equal treatment of depositors.

In addition, the Competent Person appointed by the MFSA, PricewaterhouseCoopers Malta, will remain in place until further notice and the action and instructions will remain valid until such time as the MFSA may communicate further information.

On 27 April the MFSA issued a Public Notice concerning Nemea Bank plc through which the Authority informed the public that in order to ensure the proper protection of depositors and the bank’s other clients, the Authority was appointing PricewaterhouseCoopers Malta as a competent person in terms of Article 29 of the Banking Act and Article 15A of the Investment Services Act.

In terms of the same Directive, the Competent Person was instructed to i) take charge of the assets of the bank for the purpose of safeguarding the interests of depositors and its other clients and ii) assume control of the bank’s business and to carry on that business and such other functions as the MFSA may direct.

Those precautionary measures, the MFSA said, were taken in view of regulatory shortcomings that had been identified at the bank and were to remain in place until such time as the MFSA may direct otherwise.

By a further Notice issued on the same date, the Authority advised that the limit for withdrawals from Nemea Bank deposit accounts had been set at €250 per depositor per day.

By means of another Public Notice published on 18 July the Authority advised that it had decided to ease the deposit withdrawal limit from €250 to €2,500 per depositor per day. This easing was subject to the condition that the present maturities of deposits are maintained and that no term deposits are allowed to be withdrawn before their stated maturity dates.

The Authority also confirmed that discussions were being conducted with the Bank’s shareholders with the aim of ensuring that the necessary action is taken to address the regulatory shortcomings.

But with no progress along such lines having been made, the MFSA has now decided to seek the withdrawal of the bank’s licence. Further information may be obtained by accessing the MFSA’s webpage www.mfsa.com.mt which includes a number of Frequently Asked Questions. Any communication in relation to the bank should be addressed either to the bank on 2570 8100 or the Authority on contact number Freephone 8007 4924.