HSBC slapped with €2.2 million garnishee order

An unprecedented situation is unfolding involving HSBC Bank Malta p.l.c., raising eyebrows across Malta’s legal and financial circles.

Despite losing an appeal and being definitively ordered to pay what now exceeds €2.2 million, the bank has yet to implement the ruling of the Court of Appeal.

The Shift is informed that, notwithstanding the final judgment, HSBC Malta has still not settled the amount due, prompting further legal action against the bank. In fact, the creditor, Tyre Services Ltd, has resorted to filing a garnishee order against HSBC itself, targeting funds held through the Central Bank of Malta.

The roots of this saga stretch back two decades.

In 2005, HSBC acquired a prominent showroom on Old Railway Road, Santa Venera, as part of a debt settlement. However, the acquisition was fundamentally flawed as HSBC failed to honour prior-ranking hypothecary creditors tied to the same property, with the consequence that it lost legal title, which reverted to Tyre Services Ltd.

Despite this, HSBC retained possession of the premises.

The matter escalated over the years, culminating in a judgment by the First Hall of the Civil Court in February 2020, which confirmed Tyre Services Ltd as the rightful owner.

Yet complications persisted.

HSBC had secured an injunction preventing the company from leasing the property while litigation was ongoing, effectively blocking Tyre Services’ ability to generate income from its own asset.

In June 2020, Tyre Services Ltd initiated proceedings against HSBC, claiming damages for lost rental income.

In December 2023, the Civil Court ruled in favour of Tyre Services Ltd and awarded €851,884 in damages.

HSBC appealed, arguing that it had acted in good faith and should not be held liable for damages. At the same time, Tyre Services Ltd filed a cross-appeal, contending that the damages awarded were inadequate and incorrectly calculated.

Last February, a Court of Appeal decision brought finality to the dispute.

The Court dismissed all of HSBC’s grounds of appeal and upheld the arguments put forward by Tyre Services Ltd. It also increased the damages, including additional compensation related to the bank’s failure to maintain the property while in possession, bringing the total award to €1,443,649, exclusive of interest and charges. With accrued legal interest since June 2020, the amount now exceeds €2.2 million.

Still, HSBC has yet to pay.

This has forced Tyre Services Ltd to pursue enforcement through a garnishee order, an extraordinary step given that the debtor is itself a major banking institution.

Sources told The Shift that this unprecedented situation is raising inevitable questions as to whether the delay is merely administrative or whether it is linked to broader strategic considerations.

Questions sent to HSBC received a non-reply, with a spokesperson stating only that “HSBC Bank Malta does not comment on court proceedings”.

In recent years, HSBC Bank Malta has been at the centre of ongoing discussions concerning its future ownership.

The parent group, HSBC, has been gradually scaling back operations in a number of smaller markets as part of a wider global restructuring strategy, prompting sustained speculation about a potential exit from Malta. This was confirmed last year when it was announced that Greece’s Credia Bank would be acquiring the Maltese bank.

However, no regulatory approval has yet been granted, with clearance still required from the European Central Bank and local regulators, and the process remains ongoing.

Against this backdrop, questions are being raised as to whether HSBC’s failure to promptly settle a final court judgment could be connected to representations being made in the context of the potential sale process.