BOV stops fixed term accounts

BOV clients who have been banking with Malta’s largest bank for decades have been informed that they cannot hold fixed term accounts any longer as the bank has decided to stop offering this service.

Unlike other occasions, where the bank announced such changes to its services through a public statement, BOV is keeping this decision under wraps, informing individuals with the sudden change only when their fixed term accounts come to maturity.

Contacted by The Shift, a spokesman confirmed that BOV has decided to stop offering fixed term deposit accounts.

Citing current international banking developments, where, according to the BOV spokesman, banks are incurring negative interest rate costs on client deposits that are placed with other financial institutions, he said that “this is clearly an unsustainable situation.”

“As a result, with effect from 1 January, 2022, the bank has decided to withdraw term deposit accounts from its product catalogue.”

The spokesman added that while the bank will continue to honour existing term deposit accounts until their maturity date, “once the term account matures, proceeds will be transferred to an account of the customer’s choice”.

The spokesman added that BOV did not make a formal public announcement on the withdrawal of this service because it “is communicating directly with each and every term deposit account holder.”

Fixed term accounts were very popular among the Maltese, particularly the older generations, until a few years ago as they guaranteed a fixed income without any major risks.

However, as the interest rates offered by financial institutions on these types of accounts was significantly slashed, many decided to migrate their money onto services that offer better interest rates.

Still, hundreds of BOV customers still held their lifelong savings in these types of fixed accounts and were surprised by the bank’s sudden decision.

BOV has been passing through a rough patch in the past few years.

The bank has been hit by various unpleasant circumstances, including multi-million euro lawsuits abroad and accusations of ignoring anti-money laundering rules, leading to a €2.5 million fine. This has led to shareholders seeing their investment dwindle while receiving no dividends.

In one of the cases decided yesterday by an Italian court, BOV was ordered to pay €370 million in damages over losses suffered by Deiulemar bondholders – a trust the bank had taken over in 2009.

A few weeks ago, The Shift also revealed how BOV was paying seven foreign consultants, close to the bank’s CEO Rick Hunkin some €11,500 in fees per day.

While BOV defended its CEO on the hiring of consultants, it announced his departure just a few days later.