APS Bank and the Church’s shareholding

The editorial ‘Why money matters to Church’s mission’ (October 25) and Klaus Vella Bardon’s Talking Point (‘Promoting ethical banking’, October 25) prompt me to expand on my strongly-held views (way back in 1990, when APS Bank was granted a full commercial banking licence) that the Church should then have divested itself of its shareholder (The Sunday Times of Malta, October 20). I now add what space precluded me from going into detail in my previous article.

To start with, I was never against APS moving forward in 1970 from a privately-owned small savings bank to a private limited liability company with the archbishop’s curia as its sole shareholder and welcoming, some years later as a co-shareholder, the Gozo curia.

What I considered to run contrary to the Church’s pastoral mission was the decision by the Church to retain a very substantial majority shareholding once the bank applied for, and was granted, a full commercial banking licence. Not because the bank was moving way outside the scope of its founders in 1910 but because the very nature of commercial banking involved the business of lending money to all sorts of commercial enterprises and not solely personal lending.

Indeed, my own view was that there was scope in Malta for a financial institution that raised deposits from the public, and even issued bonds for its funding, with the sole purpose of on-lending such funds purely to individuals on long-term loans mainly for house purchase.

The Church holds some €144 million worth of APS shares. Photo: Shutterstock.com

This was fully in keeping with the Church’s social responsibility role and, thus, I saw no objection to the Church holding on to its substantial shareholding in APS in such a role. I would add that my views were based on the example of building societies in the UK and American savings and loans associations.

Also, on my own experience in long-term lending for house purchase as, in 1968 when, a Barclays Bank Malta executive, I was tasked with setting up Malta’s first financial institution that was licensed for making mainly long-term personal loans for house purchase and, in certain cases, for commercial projects in support of Malta’s drive to establish new industries and to expand inward tourism.

Barclays Finance Corporation (Malta) Ltd’s loan book grew rapidly by meeting the needs of both locals and expatriates in purchasing a home. Indeed, on Barclays Malta’s operations being taken over by Mid-Med Bank in October 1975 (with the government holding a 60% majority shareholding), the government decided as a matter of policy that 50% of the shareholding of that financial institution be transferred to Bank of Valletta. This so as not to leave that bank at a disadvantage to MMB by being unable to make loans repayable over a period of more than five years, that being the maximum repayment period permitted at the time for holders of a commercial banking licence.

So much for the record.

Finally, I do recall mention having been made by the archbishop’s curia in 1990 of its intention to divest itself entirely of its then shareholding in APS within a matter of eight to 10 years. Not only was that plan evidently discarded but the Gozo curia also became shareholders, though to a lesser extent than the archbishop’s curia. Now the Church holds some €144 million worth of APS shares, which it is unlikely to be able to offload easily given that, in 2024, these yielded, on current market value, about 3.6% net of tax.

Anthony Curmi – St Julian’s