28 December 2000 - 3January 2001

BOV chairman criticised over inadequate information supplied

The Malta Shareholders Association has expressed its disappointment at the inadequate information provided by the Bank of Valletta during the annual general
meeting last week.
While congratulating the chairman, the board of directors, senior executives and all staff of the BOV for the positive results the bank had achieved in the out-going financial year, the shareholders association said that when Joseph F. X. Zahra was questioned by John G. Borg-Bartolo vis-à-vis the Provision for Specific Debt, Mr Zahra’s reply was totally inappropriate and out of context to say the least.
The Association, on behalf of the bank’s shareholders, only asked for the reason or reasons for the bank’s hefty increase in Specific Provision. In essence, why the bank felt the need to increase the Specific Provision from Lm1.9m for 1999, to over Lm5m for the year 2000. An increase of slightly over 260 per cent. Unfortunately, Mr Zahra failed to answer the question despite Mr Borg-Bartolo’s insistence for a proper reply.
The Malta Shareholders Association said it strongly deplored the Bank of Valletta chairman’s reference to Mr Borg-Bartolo’s position on the board of HSBC where again he was elected by the small shareholders. Mr Borg-Bartolo introduced himself as representing the Malta Shareholders Association, hence Mr Zahra’s reference was uncalled for, and could only be interpreted as a poor attempt to distract the attention of the audience from the pertinent question, which he avoided.
The Association said it would continue to use all means at its disposal to bring about high standards of Corporate Governance within publicly quoted companies. “Such standards demand that shareholders be given information to satisfy them that the bank is not introducing proper Risk Management Procedures now, but that the Bank’s business has at all times been operated subject to adequate and appropriate risk management control methods.
“The abnormal increase in Specific Provision for Bad Debts, which certainly relates to lending decisions taken in previous years, and the refusal to inform shareholders whether this was related to one or more accounts, may indicate that in the past, risk control procedures were lax and that the bank ought to explain why this was so,” the association said.