PD calls on Prime Minister to explain purchase of Lombard Bank shares with IIP funds

Partit Demokratiku yesterday wrote to Prime Minister Joseph Muscat asking him to explain the purchase of Lombard Bank shares with the use of IIP funds without the shares being put up for sale on the Stock Exchange.

The request was made in a letter PD MPs Godfrey Farrugia and Marlene Farrugia sent to the Prime Minister. They asked Muscat to explain via a ministerial statement on Tuesday, when Parliament convenes.

The PD said there is concern about the way the transfer of shares was made without the knowledge of Parliament.

PN demands transparency

The Nationalist Party said it demands transparency on the purchase of Lombard Bank shares by the government, which used money raised from the IIP. It is the same position the party took when a similar transaction took place with regard to Bank of Valletta shares. The PN had then declared that the transaction was illegal.

The PN, through its spokespersons Mario de Marco and Kristy Debono, said the government should consult with the sector before taking such decisions.

Government concurs

The government, in reply, said it agreed with the decision taken by the National Social and Development Fund to buy shares in Lombard Bank using IIP money.

In a statement after both the PD and PN requested clarifications, the government said that there should be transparency, although it said experts within the fund should not be hindered by the government in their work.

The government said it is convinced that the decision was taken with development in mind, as the more funds increased the more funds there will be for social reasons. The government said the PN was and still is against the IIP scheme.

The transaction

On Friday evening, the Board of Governors of the National Development and Social Fund (NDSF) announced that it informed Lombard’s Board of Directors that it had entered into a Share Purchase Agreement to acquire 21,651,746 ordinary shares in the issued share capital of Lombard Bank Malta plc. This represents 49.01 per cent of the total issued share capital of the bank, from Cyprus Popular Bank Public Co. Ltd.

The NDSF specified: “The acquisition is subject to approval being granted by the Malta Financial Services Authority in terms of the Banking Act, obtaining confirmation from the Director General (Competition) under the Control of Concentrations Regulations (S.L. 379/08) (‘the Concentration Regulations’) either that the proposed acquisition of the Shares under this Agreement does not fall within the scope of the Concentration Regulations or that it is a lawful concentration, obtaining a Decree from the Central Bank of Cyprus in its capacity as Resolution Authority ordering the disposal of the Shares by the Seller to the Purchaser and various other conditions precedent as required by applicable laws and agreed between the Parties.”