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By Kurt Sansone
Bank of Valletta shares were trading at very high level this week after the Ministry for Investments announced that government and Banco di Sicilia had reached an agreement over the joint sale of their shareholding in BOV.
The news was first reported on Sunday in our sister newspaper MaltaToday and according to Jesmond Mizzi, Chairman of Jesmond Mizzi Financial Services, BOV shares, already buoyed by the positive half-yearly financial statements published recently, were trading at the highest level possible.
“This news cannot hurt investors and share prices have been pushed up. The agreement with Banco di Sicilia was an important step and makes it easier to sell to a strategic partner. One has to understand that a strategic partner would want quite a chunk of shareholding and the agreement for joint sale of government’s and Banco di Sicilia’s shareholding would give the sellers more power to negotiate a stronger price on the international market,” Mizzi said.
The search for a strategic partner is conditioned by two main issues: the size of the shareholding and the market share the bank holds.
Any investor would only be purchasing around 40 per cent of the bank’s shareholding and as such, would not emerge with a sound controlling stake in the bank. “This may make it harder to find a strategic investor,” Mizzi said. He however pointed out that any investor would be looking at the quasi duopolistic situation in the local market and the good profits the bank has been making.
“How potential buyers will evaluate the situation is difficult to judge but BOV is the second largest bank and both HSBC and BOV have been making good profits in a market they have dominated,” Mizzi said.
Government controls around 25 per cent of BOV’s shareholding while Banco di Sicilia has a 15 per cent stake. Both entities have signed a memorandum of understanding by which they agreed to initiate a process leading to the joint appointment of an independent financial advisor.
They also agreed to jointly sell their shareholding to a single strategic investor, which is the same philosophy adopted by government for the privatisation of Maltacom.
BOV was the first public company to be listed on the Malta Stock Exchange in 1992. Government reduced its shareholding to around 25 per cent in 1995 by issuing 12,000,000 shares to the public.
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