Church to keep all APS shares but ease its hold on Bank

The influence of the Maltese church on Malta’s third-largest Bank is expected to continue diminishing if a planned new rights issue, set to be completed by the end of this year, proceeds as anticipated.

According to a company announcement, APS, which failed to acquire HSBC Malta following opposition by the Finance Ministry, said that it is planning a new share issue, amounting to a value of some €45 million, to strengthen its equity base.

The two majority shareholders, the Maltese Curia, led by Archbishop Charles Scicluna, and the Gozo Church, will not be purchasing new shares. Instead, their portion will be offered to either other financial institutions or the general public.

By implementing this strategy, the church will reduce its influence over the Bank’s operations, which has faced internal criticism within the Curia. Still, the dioceses of Malta and Gozo will retain their status as the majority shareholders of the Bank when their shareholding is combined.

Currently, AROM Holdings Ltd, wholly owned by the Archdiocese of Malta, holds 54.67% of the Bank’s shares, while the Diocese of Gozo holds another 12.52%

According to APS’s announcement, the qualifying shareholders “will not be subscribing to their rights in any material way, if at all, such as their proportional ownership and voting interests in the Bank will be further diluted. Subject to the full up of their rights, the shareholding of AROM Holdings Ltd is expected to be less than 50%”, APS said.

A rights issue is a method used by companies to raise additional capital by offering new shares to their existing shareholders, typically at a price lower than the current market value. Although no details have been provided about the cost of the new shares, a prospectus is expected to be released in the next few days, pending regulatory approval from the MFSA.

APS is seeking substantial investors to commit to a significant portion of the new rights issue, with each investor prepared to invest half a million Euros in the Bank. The remaining shares not purchased by existing shareholders will be made available to the general public.

APS has experienced a growth trajectory in recent years, highlighted by the listing of approximately 30 percent of its shares on the Malta Stock Exchange in 2022. However, an attempt led by CEO Marcel Cassar, with the support of Archbishop Scicluna, to acquire 70 per cent of HSBC Malta ultimately failed. The Bank withdrew from the negotiations at the last minute, after investing nearly €2 million in the effort.

It was widely recognised in banking circles that APS lacked the financial capability to acquire HSBC. Additionally, Finance Minister Clyde Caruana opposed the deal due to concerns over reduced competition in Malta’s already small market. The failed attempt faced intense criticism from senior clerics within the Curia, who were against the preliminary agreement made by the Archbishop without their knowledge.

The Bishop of Gozo, Anton Theuma, opposed the deal, believing that the church should focus on its religious mission rather than becoming a significant player in the economy.