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3 NEWS 5.5.2022 FROM PAGE 1 Cordina said the claim had been stud- ied and discussed extensively and all 13 members of the bank's board of directors had unanimously agreed to the settle- ment due to the risks the bank faced. On 8 February, the Tribunal of Torre Annunziata in Italy, presiding over the case instituted against Bank of Valletta by the curators in bankruptcy of the Dei- ulemar Group, had ordered the bank to pay €363 million. BOV appealed the judgement in March and then engaged with the curators to explore the possibility of reaching an out of court settlement. On Tuesday, the bank announced it had agreed to pay a settlement of €182.5 mil- lion. Cordina said that the bank had al- ready made a conservation of capital of €363 million following the Italian court's judgement. With the settlement now agreed upon, the remaining funds in escrow would now be released. "is will provide the bank with a sur- plus to use to expand our credit facili- ties," Cordina said. Asked if this meant BOV would now be in a position to approve a dividend for shareholders, Cordina said he could not commit to a dividend before having the approval of the regulator. "But this does place in a better posi- tion to be able to issue dividends," he said. "It has always been our intention to move towards payable predicted div- idends and we are now better placed to do that." Cordina would not comment on deci- sions taken by previous boards, as in the case brought by investors in BOV's La Valette Multi-Manager Property Fund. In that case, the bank pursued litigation and did not seek a settlement outside of an initial offer that was refused by many of the investors. "As non-executive chairperson heading the board of directors, my duty is to safe- guard the collective interest of our share- holders," Cordina said. "e Deiulemar posed huge risks to the bank and that is why it merited a settle- ment." Litigation Bank of Valletta's agreement to pay €182.5 million to settle the €363 mil- lion Deiulemar claim brought to a close a decade of litigation that cost the bank millions in payouts and dented its public image. In September 2020, BOV agreed to pay €26.5 million in a settlement with the Swedish Pensions Agency to avoid fur- ther litigation on its role as custodian of Falcon Funds. In December 2020, a nine-year le- gal battle for hundreds who invested in BOV's La Valette Multi-Manager Prop- erty Fund finally come to an end when an Appeals Court ruled in favour of the bank. Deiulemar e bank was appealing the forfeiture of a €363 million precautionary security last December, when it engaged with the curators of the bankruptcy of the Deiule- mar group, to explore the possibility of a mutually satisfactory resolution to the dispute out of court. e claim was made by the 13,000 bondholders of the defunct Deiulemar shipping company. e bank last year had attempted an offer of €50 million for Deiulemar bond- holders to settle the claim out of court, but this was rejected. Under the Torre Annunziata proceed- ings, BOV was being requested to pay an amount equivalent to the value of the Deiulemar shares which had been settled on trust, with the bank as trustee. Bank of Valletta disputed the valuation of these shares, saying these were worthless following the bankruptcy of Deiulemar Group. In 2009 Bank of Valletta had taken over a trust that held €363 million in assets of the Deiulemar company, which filed for bankruptcy in 2012. A Rome criminal court in 2004 had already determined that the Deiulemar company had under-declared liabilities of €700 million. In 2014, seven members of the three founding families of the Dei- ulemar company were jailed for up to 17 years for illegal financial transactions, owing €800 million to creditors. e European Court of Human Rights had turned down BOV's claims of unfair treatment in Italy, because the bank had not exhausted all its remedies in Italy. e bank had complained it was be- ing denied a fair hearing in the courts of Torre Annunziata, a small provincial town where the majority of creditors seeking compensation from BOV origi- nated. Swedish Pensions Agency Falcon Funds was a Swedish private pension run by a Maltese company, but whose investment decisions were vitiat- ed by backroom dealings with its invest- ment manager Temple Asset Manage- ment. Over €247 million was lost, resulting in the shuttering of Temple in Malta, crim- inal action in Sweden against Temple di- rector John Farrell; a two-year ban from the MFSA on holding approved posi- tions for Falcon directors Tonio Fenech, the former Nationalist finance minister, and Ian Zammit and Joseph Xuereb; further court action in Malta from BOV against a host of entities involved in si- phoning off cash from the pension fund; and the imprisonment of chief instigator and fraudster Max Serwin in Sweden. A total €32 million, including insurance compensation, were returned to Falcon Funds savers, the Swedish pensions agency said. La Valette Fund - €26.5 million In 2020 and 2021, Bank of Valletta won a series of appeals against decisions in the name of investors in the La Valette Multi Manager Property Fund. e bank won the appeals from a de- cision given by the Arbiter for Financial Services in relation to a number of prop- erty fund claims. BOV had filed an appeal before the Court of Appeal from a series of deci- sions delivered by the Arbiter for Finan- cial Services in 2018, where the arbiter found in favour of the claimants against the bank. Back then the arbiter ordered BOV to refund millions in lost savings with inter- est, due to alleged mis-selling - specifi- cally €3.4 million plus legal interest of 8% from the date of complaint, to some 500 aggrieved investors. e investors had complained that the 75c share offer by BOV in 2011, offered just weeks before sanctions were issued, was insufficient. A further 25c share compensation ordered by the MFSA was also considered insufficient. ose complaints had been submitted by stockbroker Paul Bonello of Finco Treasury Management and law firm Re- falo Zammit Pace in July 2016. In the original findings, the arbiter had said BOV's initial 75c offer was a breach of consumer rules, and that "the major- ity of clients were elderly investors who had expected to be entering a safe invest- ment with operators who knew more than they knew, and who would observe the prospectus rules they themselves is- sued, with self-imposed restrictions they had to observe. is did not happen as observed by both the MFSA and the ar- biter." e MFSA also fined BOV six times between 2011 and 2012 for mis-selling the fund to inexperienced investors and for breaching its own investment restric- tions. Around 2,300 investors had then ac- cepted the bank's subsequent compensa- tion of 75c per share on condition that they waive legal action against the bank should the MFSA find it had breached property fund conditions. e Appeals Court declared that the "settlement agreement" of May 2011 be- tween the bank and the property fund investors was not deemed to be a matter of review for the court in terms of the EU's Unfair Contract Terms Directive. erefore the Arbiter's decision which upheld the complaints of around 400 in- vestors, and awarded compensation in excess of €3.4 million plus interest, was overturned. Bank of Valletta 'now better placed' to issue dividend

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