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2 maltatoday | SUNDAY • 21 JULY 2019 MATTHEW VELLA MALTA'S financial services industry has to reckon with a momentous decision by Bank of Valletta to stop its custo- dian services for Malta-based funds which hold nothing less than four billion in assets. The major bank has already sent out its prenotification let- ters to financial services com- panies which run so-called UCITS funds, that it will be eventually terminating its cus- todian services. As a custodian, BOV offered a very specialised service – mandated by EU rules – which ensures that funds which in- vest customers' savings in bonds or blue-chip stocks, are liquid enough to ensure the redemption of their invest- ments. This crucial surveillance role also ensures that investment and pensions funds are re- specting their own rules when investing their clients' cash in liquid investments. But recent misadventures with its own La Valette funds, as well as a pension fund of- fered on the Swedish pension platform that was secretly channelling millions to an un- scrupulous Swedish business- man, have led to momentous decisions for BOV. BOV assumed its role as Malta's first port of call for custodian services when Deutsche Bank closed down its services on the island, with most of its custodian business migrating to BOV. UCITs funds with dollar in- vestments are especially con- cerned, due to Malta's own problems, with a shrinking network of US correspondent banks. The industry knows that with only a few alternative custodian service provid- ers, such as Sparkasse Bank or Swissquote, the search for a Maltese custodian – as re- quired by EU law – is crucial ahead of BOV's termination of services. Bank of Valletta had already announced last year that it was reconsidering its risk ap- petite by taking all steps to close its trust business, and undertake a strategic review of the custody business and evaluate its client base. "The bank will be undergoing a de-risking exercise by cutting down on non-core business that delivers very little profit for the risk involved," BOV chairman Deo Scerri has said. Paring down its custodian services to optimise its risk profile is only a confirmation of Scerri's announcement last year. BOV had already put aside €75 million from its profits in "litigation provisions" over three pending cases – namely the Deiulemar case in Italy, which is related to the bank's trust business; the La Valette Property Fund, over which BOV is appealing a decision by the financial services arbiter; and the Falcon Funds pensions bust, that involves losses suf- fered by Swedish pensioners. Only this week, BOV gave notice in court that it would hold some 158 individuals and entities responsible for any damages it might incur in the Falcon Funds saga. BOV was itself served with judicial letters from the Swedish Pen- sions Agency back in April, through which the agency said it is holding the bank respon- sible for any losses suffered with its investment in Falcon Funds. The bank denies any responsibility. BOV chairman Deo Scerri had said the decision to set aside €75 million to cover these three cases meant the bank would not be giving its shareholders a dividend in 2018. "Conscious of the fact that we will be departing from a long-standing tradition, the board is proposing not to give a dividend for 2018 and in- stead reinvest all profits back into the bank to ensure finan- cial sustainability, given the litigation provisions," Scerri said in 2018. The bank's profit for the first six months before the litiga- tion provision was €88 million, which dropped to €13 million as a result of the €75 million charge. Bank officials said the bank's balance sheet remained very strong and the litigation cas- es did not have an impact on profitability. BOV has deposits to the tune of €10 billion, is- sued loans to the tune of €4.5 billion and shareholder funds are approaching €1 billion. In Italy, the bank is fighting a precautionary warrant for the seizure of the sum of €363 mil- lion, which bondholders from the failed shipping business Deiulemar case claim were lost in a trust underwritten by the bank. BOV has refuted the claim, insisting the bank had only re- ceived three sets of sharehold- ing in trust worth €2,000 each. "The bank never received €363 million through its trust busi- ness," the bank's lawyer said. NEWS Professional Officer - Draughtsperson Jobplus Permit Number – 543/2019 Related qualification at Diploma level (Level 5) or equivalent or higher. Minimum 5 years proven experience in draughtsmanship. CAREER OPPORTUNITY WE ARE RECRUITING ESSENTIAL Qualifications Experience Interested persons are kindly requested to submit a letter of application and a detailed CV only by email, as one pdf document to: hr.la@landsauthority. org.mt by Monday 29th July 2019. Emails are to indicate the position being applied for and the name of the applicant in the subject. Applications will be acknowledged and treated in strictest confidence. For more information visit the link below: https://landsauthority.org.mt/about-us/careers/ Lands Authority is seeking applications from interested persons to fill the following position: OR After Swedish pensions headache, BOV to stop custodian services With some €4 billion in assets under Bank of Valletta's custodianship, the bank sends out warning that it will no longer oversee funds for its clients BOV chairman Deo Scerri: the bank has had to suffer the brunt of past decisions that keep haunting it in various litigation procedures to this day