Bank of Valletta: a bank run by bureaucrats with no skin in the game

Today, BOV shareholders had some reprieve as the stock rallied more than 18% on the news that it has finalised a €182.5 million out of court settlement on the Deiulemar case.  It will not be enough to soothe the pain of long-term investors.

Today’s BOV stock pump.

Shareholders of Bank of Valletta have been fuming all over social media for not getting any dividends from their downtrodden shares. Bank of Valletta is one of the worst-performing stocks on the Maltese Stock Exchange having lost more than half of its market value since 2017. Bank of Valletta went from a market capitalization of more than one billion Euros in September 2017, to a market cap of fewer than five hundred million Euros today.

Bank of Valletta is a bank run by directors appointed by the government who have no skin in the game. Not even the Chairman and the CEO believe in the bank enough to buy the bank’s shares. As of BOV’s annual report, there are only three directors who hold its shares and these are Miguel Borg with 7,635 shares, Diane Bugeja with 29,310 shares and Alfred Lupi with 34,204 shares.

One has to consider whether it is good governance that none of the other directors has any shares in the bank. And surely, the Chairman and the CEO have to be incentivised with their own investment, so one would assume that if good governance is to be upheld both the Chairman and the CEO would own a large number of the bank’s shares they themselves run. Clearly, the interests of the directors do not seem to be aligned with the shareholders. BOV is run just like any other government and public department.

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