APS Bank has defended its plan to issue €50 million in subordinated bonds after a stockbroker accused it of rushing through the process before the implementation of an investor protection EU directive.
In an opinion piece on Lovin Malta, stockbroker Paul Bonello questioned why the Church-owned bank has applied to the MFSA to issue these bonds now when an EU directive (BRRD2) to safeguard investors from their risk will kick in on 28th December.
These directives will oblige banks and stockbrokers to take their clients’ financial experience into account before issuing subordinated bonds and ensure that subordinated bonds don’t make up more than 10% of their clients’ portfolio.
This is intended as a safeguard against misselling, to prevent inexperienced investors from losing all their savings in risky bonds.
“APS is rushing through this issue and the subordinated bonds are being issued and sold in November… weeks before the new BRRD 2 rules intended to protect investors become effective. What an unholy coincidence!” Bonello wrote.
“This is not smart behaviour; this is unscrupulous and obscene. Coming from a Church-owned bank, it is yet another reason why money and religion should not mix. This sort of trickery is not illegal of course but constitutes an illegitimate and immoral abuse of an unwary and uninformed general public.”
However, APS defended its decision and accused Bonello of having an unspecified “agenda”.
The bank said its upcoming bond issue was announced as far back as 2017 as part of its capital development plan, which was backed by its shareholders as recently as the 2020 annual general meeting.
It pledged to issue these subordinated bonds “in the most transparent of ways, with full disclosures and in observance of the due regulatory approvals and obligations which the Bank unfailingly complies with.”
“APS Bank prides itself with having one of the most comprehensive and robust governance structures in line with the most modern practices and as expected of its classification as an O-SII (Other Systemically Important Institution),” it said.
“APS Bank rejects in the strongest possible manner Mr Bonello’s agenda, his gratuitous attributions and deplorable language.”
“The Bank is reserving the right to take whatever further actions are necessary to safeguard the trust and reputation it always enjoyed, as well as the interests of its depositors, customers, shareholders, employees, who together constitute tens of thousands of Maltese and Gozitan households.”
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Photo left: Credit: APS Bank (Facebook)