Mediterranean Bank bought Volksbank Malta for €35.3 million, agreeing to refinance its existing debt with Österreichischen Volksbanke AG.

The sale is the result of the purchase by the Austrian State of 43 per cent of Volksbank Malta’s parent company, Österreichischen Volksbanke AG, in 2012. Among the conditions attached to the deal was that it would divest itself of its overseas network, ranging from regional and specialised banks to credit cooperatives.

The process of selling Volksbank in Sliema started in April, when the management team started to downsize its overseas investments, which were sold to other banks outside Malta.

An adviser on mergers and acquisitions was appointed in mid-September and about 130 parties expressed initial interest. Twenty of them gave positive feedback and half of them were sent further details and invited to bid.

Sources said that, once the shortlist was drawn up, Mediterranean Bank was vying against a high street bank.

After taking into account the carve-out last year of its international business, Volksbank Malta has total assets of €150 million and equity of €56 million. Its pro-forma after tax profits for the period ended December 3, 2012, after taking into account the carve-out of international business, were approximately €605,000.

Volksbank Malta has operated as a fully-licensed Maltese bank since 2002.

Mediterranean Bank said in a company announcement that it expected that the purchase of Volksbank Malta would consolidate and expedite its Maltese growth strategy through Volksbank Malta’s portfolio of Maltese clients, which complements Mediterranean Bank’s existing customer base and aligned with its future growth strategies.

The purchase is expected to be completed in the coming weeks, subject to required approvals from relevant governmental and regulatory authorities.