Issue link: https://maltatoday.uberflip.com/i/777084
8 MATTHEW VELLA THE online-only bank Nemea, taken under the controllership of PricewaterhouseCoopers, has said it disagrees with the decision by the Malta Financial Services Au- thority to ask the European Cen- tral Bank to withdraw its licence. Nemea plc has appealed the MFSA's decisions to appoint a competent person and to impose a deposit withdrawal limit, amongst others. Nemea was placed under the control of PWC as a 'competent person' in April 2016 to ensure the proper protection of depositors and the bank's clients after the ECB flagged "serious regulatory concerns" at the bank. "Nemea categorically refutes the MFSA's contention that the bank is affected by regulatory short- comings. Nemea also contests the MFSA's statement that to date no tangible progress has been regis- tered by the bank's shareholders to fulfill regulatory requirements. The bank's shareholders wish to put on record that they have always collaborated in utmost good faith with the MFSA, that the bank is meeting and has met, at all times, its capital and other regulatory requirements to a ma- terial extent, and that the bank is fully viable and able to resume its normal profitable operations," the bank said. Nemea is contesting the pro- posal by the MFSA to the ECB to withdraw their licence, saying the proposal is without any legal or factual basis. "Should any regula- tory action as has been proposed by the MFSA be taken against the bank, such action will be vigor- ously and robustly challenged be- fore the appropriate judicial fora at both the Maltese and EU levels." The MFSA said that discussions with the shareholders to ensure the necessary action had produced no tangible progress. "Given that this situation cannot be sustained indefinitely without undue detri- ment to depositors, the Authority has now decided to propose to the ECB the withdrawal of the licence granted to the bank. This measure has been taken by the Authority in the interests of the depositors of the bank," the MFSA said. Nemea said it was committed to restoring normal operations in the shortest time possible in the inter- est of depositors and all stakehold- ers. Pending the ECB's final decision on the licence withdrawal, a pro- hibition of the withdrawal of de- posits has been put in place with immediate effect. Nemea specialised in providing banking and investment services to individuals, businesses, institu- tions and high net worth individu- als across the European economic area. As an online-only bank Nemea could afford to operate with lower costs and overheads than tradi- tional banks' relative cost base, and earn income by generating interest, fees and commissions, and financial income. Clients' de- posits were invested by the bank in loans, deposits, other fixed in- come instruments and other low risk securities. The bank's directors include former prime minister Lawrence Gonzi and financier Joseph F.X. Zahra, recently appointed to head a special finance commission for the Vatican by Pope Francis. The other directors are Finnish co- founders and co-chairmen Mika Lehto and Heikki Niemelä. Nemea Bank Plc is in turn owned by Nemea Plc, itself owned by Ne- vestor SA of Belgium (40%) and Ninovan Ltd and Shilmore Ltd of Cyprus (30% each). The bank is ultimately jointly owned by its founders Heikki Niemelä and Mi- ka Lehto. Nemea Bank posted a €214,000 pre-tax profit in the three-month period ended 31 March 2016, on income of €865,000. The bank has €68 million in assets, composed mainly of €30 million in loans and advances to customers and €22 million in loans and advances to banks. According to the unaudited fi- nancial position in March 2016, the bank owed €61 million to cus- tomers. In 2015, the bank posted a €207,000 pre-tax profit on operat- ing income of €2.9 million. maltatoday, WEDNESDAY, 25 JANUARY 2017 News Lawyer informed minister of intent to redeem ground rent CONTINUED FROM PAGE 1 But he actually attributed an element of pressure to the Marsovin com- pany secretary, Joseph Chetcuti, who – in turn – denied exerting any pressure, but admitted seek- ing information from German on any progress registered, as well as informing Azzopardi of the com- pany's intention to redeem the ground rent. Contacted yesterday, Chetcuti told MaltaToday he did not wish to comment further on the issue, especially since legal proceedings were still underway. "All I can do is assure you that the company always carried out all its dealings with the greatest responsibility and correctness," he said. Owen Bonnici, who leads the charge that Azzopardi should be held politically responsible for the irregularity, said that VBGL chairman Nazzareno Vassallo has stated under oath that when in 2011 the Attorney General de- manded he pay a higher premium for the emphyteusis, he met a min- ister who had reassured him that a compromise would be reached. Bonnici suggests this compro- mise was with Azzopardi, who in 2012 appointed a committee of architects to reappraise the value of the brewery condition that had been irregularly removed. Vassallo would not comment on the latest revelations, and attempts to reach German proved futile. Reappraising the brewery condition A big question mark concerns the way in 2012 that a three-man committee of architects led by Prof. Alex Torpiano appraised the value of the brewery condition – an effort on the part of Azzopardi to address the wrongs of the 2009 redemption, raised in the House of Representatives by the then La- bour opposition. Azzopardi had asked Albert Mamo, Commissioner of Lands, and the Attorney General to take action, which resulted in a judicial protest against Vassallo. Vassallo – a PN donor who at that time was building the PN headquarters – was allowed to nominate one of the three-architect committee to re-appraise the brewery condition. Vassallo never paid a cent of the reappraised €706,000, because he 'paid' the resulting difference from the original redemption value by dropping a claim for expropriation with the GPD on other land he owned. And he still sued the GPD later, with the case still ongoing. On his part, Prof. Torpiano says that it was the director-general of the Government Property Depart- ment at the time who instructed that the valuation of the direct do- minium – the brewery condition – be based on '1990 values'. He adds a caveat. "In 1990, the perpetual emphyteusis was set at Lm10,000 – that means the em- phyteusis remains unchanged, in perpetuity. That value had to be our starting point in any case, because it would be unchanged at any time the ground rent was re- deemed." Prof. Torpiano suggests any qualitative difference between the 1990 value of the brewery condition and the 2012 value, would be inf lationary. "Any ad- justment would be minimal," he claimed. The NAO claims that had the GPD retained the condition, it could have demanded at least €7.8 million from Marsovin. Prof. Tor- piano contests the assertion: the company could have redeemed the ground rent in 1990 or in 2020, and would still have paid only Lm200,000 (€465,975) – 20 times the emphyteusis, as laid down at law. The reason the land was grant- ed for just Lm10,000 a year was a way in 1990 for the Nationalist government to encourage Marso- vin's business and investment in the beverage industry. When in 2012 the architects were told to upscale the value of the brewery condition, they cal- culated what premium Marsovin would have had to pay, over and above the redeemed ground rent, and that would have been in 1990: €706,400. Prof. Torpiano insists the archi- tects could not value this condi- tion on a 'freehold' basis, because the redemption meant the gov- ernment had rendered the land free and unencumbered. "It is true that, in 2009, a mistake was made during the redemption pro- cess, because the condition limit- ing the type of industrial use al- lowed, was removed." Nemea says it will contest MFSA request to withdraw banking licence Online-only bank under controllership of PWC says it will challenge request to ECB to remove banking licence