Like many other banks, BOV is in the process of restructuring following significant changes in banking regulation and supervision. This process started in 2014 when the European Central Bank assumed responsibility for the supervision of significantly important banks in the Eurozone.
This year, BOV’s senior management team experienced some significant changes with the appointment of a new CEO and chairman. The new CEO, Rick Hunkin, comes from an international background with experience in leading the restructuring of banks aiming to become more efficient and compliant with tightening regulation.
The new chairman, Gordon Cordina, is an experienced economist who has been involved in the banking industry in various roles.
As Cordina prepares to take up his post in a few months’ time, the new management team at BOV faces some major challenges. Perhaps the most urgent priority is to work on improving Malta’s and the bank’s reputation in the international field.
This challenge comes in the context of serious allegations about Malta’s lax adherence to anti-money laundering regulations. BOV has already started to close accounts of individuals and organisations that do not have a direct connection with Malta.
The threat of international banks, especially in the US, to deny correspondent banking facilities to BOV can only be lifted when the bank shows it is vetting all transactions that pass through its clearing system. US banks particularly target the e-gaming industry because it is perceived to be used for money laundering by organised crime.
In the last year, BOV updated its core banking system. This upgrade was not just a technical achievement but also an opportunity to revamp its online banking services to serve its customers more effectively. New investment in technology will now be needed to make the monitoring of transitions to prevent financial crime more feasible.
But the most challenging task for the new BOV leadership is the change in culture that the bank needs to promote to satisfy its customers, shareholders, regulators and the community at large.
The backdrop to BOV’s restructuring plan is the close relationship between the government and the bank that may often have distorted the way the bank has been managed so far.
With the government still being the largest shareholder with the right to appoint the chairman, it would not be surprising if politicians looked at BOV as an extension of government even if legally it certainly is not. Likewise, some bank employees could adopt the mindset of being civil servants with the inherent rights that are perceived to be linked to this status. Job security for life and access to political patronage should never be anyone’s right.
The bank’s customers may also consider BOV as an extension of the government. They may expect that the bank’s business model should include considerations for supporting and subsidising businesses that fail the solvency criteria that commercial banks require for lending.
The new CEO and chairman of the bank have the experience and the independence of thought necessary to steer BOV out of the sphere of control of politicians and lobby groups.
The business model that they will adopt will aim at putting customers’ interests first.
It will also hopefully give a return to the thousands of small shareholders who in the last few years saw the price of their shares collapse and dividends withheld.
BOV should be a better bank for the Maltese community once the operational and cultural challenges are addressed successfully.