HSBC Malta was only told of the bank’s potential sale on the day it was announced, CEO Geoffrey Fichte told the bank’s shareholders at a rowdy meeting held on Thursday morning.

Fichte was speaking at an EGM called by the bank five months after it announced that its majority shareholder, HSBC Continental Europe, was carrying out a “strategic review” of the bank’s operations, with an eye to selling the bank.

HSBC Continental Europe holds 70% of the bank’s shares, with the remaining 30% in the hands of individual shareholders, several of whom packed a conference room at the Corintha St. George hotel hoping to learn more about the sale.

But they are likely to have left the meeting none the wiser, with the HSBC Malta board repeatedly drawn to explain that they are not involved in the negotiations and are legally precluded from having any information about potential bidders at this stage.

HSBC Malta only knows what is already in the public domain, Fichte and HSBC Malta chairman Manfred Galdes told shareholders, namely that several potential bidders were interested, with APS being one of them.

“But what does several bidders mean? Is it three bidders or ten?” one shareholder asked, to murmurs of assent from the room.

“In all transparency, we do not know,” came the reply.

HSBC Malta CEO Geoffrey Fichte in 2023. File photo: Chris Sant Fournier

Shareholder consent needed to kick off negotiations

Thursday’s meeting marks the first formal step towards the bank’s potential sale, with shareholders asked to give the bank their consent to pass on potentially sensitive data about the bank to potential bidders, in order for them to make an informed decision on whether to bid for a 70% stake in the bank.

This effectively paves the way for formal negotiations to begin, with the “several” bidders eventually being whittled down to a single bidder.

But the meeting’s initial formalities quickly gave way to a rowdy Q&A session, with several shareholders taking the floor to tell the HSBC Malta board of their disappointment at the decision to sell and their worry that they would be making a loss.

“Can the board assure us that the sale price won’t be below the bank’s asset value?” one shareholder asked, to rapturous applause.

“The negotiated price is out of our hands. We don’t know the price and we cannot influence it,” the board said, explaining that there are several legal safeguards protecting shareholders in situations such as this.

But the board’s assurances did little to temper the mood.

“When APS said it was interested, share price went from €1.70 to €1.40. Us small shareholders are suffering,” came one comment from the floor.

“Can the bank refuse to sell at a lousy price? We don’t want this” asked another shareholder.

Others yet were unconvinced by the board's explanation that, as a systemic bank, it must follow European Central Bank rules when issuing dividends.

"It's so that you can lend money to those guys who build towers, right?" yelled one angry shareholder.

And where did the bank’s previous optimism go, asked another, quoting from a Times of Malta interview with Fichte, in which the bank’s planned investments were trumpeted.

But, Fichte said, HSBC Malta was in the dark, just like anybody else.

“HSBC Continental Europe told us about the strategic review on 11 September , we didn’t know before then,” Fichte said. “We immediately issued a company announcement, in line with our obligations”.

Rules issued by MFSA say that HSBC Malta would have no say in the negotiation and could not be directly involved in the deal up to this point. The rules also oblige the company to issue a company announcement, such as the one issued in September, once the bank learns of any relevant information.

Although HSBC has sold several banks across Europe, the sale of HSBC Malta is particularly delicate, as it is believed to be the first time that HSBC will be selling a systemic bank in Europe, meaning that any sale is subject to European Central Bank approval.

Show of hands

Like any local gathering worth its salt, political rivalries quickly reared their head during the meeting.

“Is HSBC leaving Malta because of the country’s bad reputation?” one shareholder asked, to yells of “not true!” from across the room.

“Did the Mid-Med bank sale reflect market value, or was the bank discarded because they wanted to get rid of it?” came the immediate retort from another shareholder, dredging up a decades-old controversy.

“These questions are not relevant, we’re here to get shareholder approval,” Galdes said, hoping to move on from the bickering.

But a show of hands at the end of the meeting suggested that the bank’s minority shareholders remain unconvinced by the potential deal, with only a handful of people in the crowded room raising their hand to consent to the start of negotiations.

But this is likely to have little impact on what happens next, with the bank’s majority shareholder, HSBC Continental Europe, keen on a deal and voting in favour of the resolution, effectively pushing it through.

Despite the concerns raised during the meeting, a vote by secret ballot taken immediately afterwards overwhelmingly approved the resolution, with 95.6% of votes (including those of the majority shareholder) in favour.

As one shareholder wistfully told the board, “it’s nice that we met, I understand that your hands are tied and you’re following procedure, but this is a foregone conclusion”.

Any decision to sell is not ours to take: HSBC Malta

In a statement published hours after the meeting, HSBC Malta said that it had “obtained the necessary shareholder approval” to embark on the next step and disclose information to potential bidders, in line with confidentiality regulations.

“The majority shareholder’s strategic review remains at an early stage and is not aware of any decisions having been taken. It is not possible or appropriate for the Bank to speculate on how any transaction might progress,” the statement said, promising to keep shareholders informed of any developments.

“Any decision to sell or otherwise rests with the majority shareholder, HSBC Continental Europe (HBCE), not HSBC Bank Malta p.l.c,” the bank reiterated.