HSBC devalues bank for quick sale, minority shareholders shortchanged

HSBC, Malta’s second-largest bank, has been sold at a significant discount, shaving off its value by over €260 million. This move indicates the international bank’s desire to exit the Maltese market as soon as possible.

Also, many small shareholders, expecting a fair return on their investment, have been disappointed as they were promised a price significantly lower than the net asset value of their holdings.

Banking experts told The Shift that HSBC’s announcement that its mother company was selling its 70 per cent stake for €200 million, to Greek Credia Bank, a much smaller bank than the global giant, shows “how desperate the bank was to stop doing business in Malta”.

Through a company announcement on Tuesday, HSBC said that the Greek Bank, partly owned by the Greek state, would be paying 0.793 cents per share for its 70.03% share, amounting to just €200 million.

At the same time, it said that it will be offering €1.44 per share to all those minority shareholders who would want to sell their shares to the new owners. They are not obliged to sell, but the buyer institutions are obliged to make an offer.

Combined, the offer accepted by HSBC puts the selling price of the long-standing bank at €355 million.

According to the latest published accounts, the book value of HSBC Malta currently stands at €1.71 per share, equivalent to €615 million in net asset value.

Still, HSBC did not ask for this price but gave the Greek bank a massive discount to be able to make a quick sale.

Experts commented that, ironically, the Greek bank will be paying less than what HSBC paid to acquire Mid-Med Bank from the Maltese government in 1991 when John Dalli was Finance Minister.

“At least, the PN government had put Malta on the global map,” they commented. At the time, Labour had harshly criticised the move, condemning the low price of the sale.

On Wednesday, there was increased trading in HSBC shares on the Malta Stock Exchange, following Tuesday’s announcement.

The share price increased to €1.42 per share, or 9 cents more than before the announcement. It is expected that the price will now peak up to €1.44 per share – matching Credia’s offer – until the deal between HSBC and the Greek bank is endorsed by the European Central Bank (ECB).

Censorship on the airwaves

Meanwhile, in what appears to be a live incident on the airwaves, financial commentator Paul Bonello, who has a regular slot on the Church’s radio, RTK, claimed that the station’s management told him not to comment on the HSBC deal as this was “advertorial broadcasting”.

Despite these attempts, he continued with his commentary.

“My strong suspicion, of course, is that RTK is impeding my programme on a public interest company and a company listed on The Malta Stock Exchange in which thousands of the general public are shareholders either out of fear of loss of advertising by HSBC, or rather, more probably, Credia Bank.”

The Church, through APS Bank, had attempted to buy HSBC but failed, following an informal veto by Finance Minister Clyde Caruana.