Lombard Bank is moving ahead with a much-delayed share issue, with the local bank saying it intends to distribute roughly one-third of its annual profits to shareholders as dividends.
In a company announcement issued on Monday, the bank said it has applied for regulatory approval to issue a prospectus for its planned share issue on the Malta Stock Exchange.
The bank has established a September 19 record date and intends to offer the shares to shareholders as of the close of trading on September 15 – this coming Friday.
Lombard says it intends to sell the new shares at €0.75c each, with shareholders offered two new shares for every three they own.
The bank will then make the rights issue available to its employees, employees of its subsidiaries, bank directors, Maltapost shareholders and the general public, in that order of preference.
It says it intends to use money raised from the rights issue for regulatory purposes and to implement a growth strategy.
“This is expected to result in increased profits and, subject to business requirements and regulatory approval, dividend distributions of circa one-third of annual profits,” the company said.
Lombard registered a €27.7 million pre-tax profit in 2022 but a more modest €5.4 million pre-tax profit in the first half of this year.
In its company announcement, the bank said that its €0.75c offer price for new shares represented “a circa 20% discount to the price of €0.93 which, to date, is the Trade-Weighted Average Price of the Bank’s shares over the last six months.
“It also represents a discount of over 50% to the Net Asset Value of the Bank’s shares, which as at 30 June 2023 stood at €1.51 per share,” the bank said.
The bank first announced its intention to raise capital through a share issue in 2022 but was forced to pause its plans when its leading shareholder, the government-run National Development and Social Fund (NDSF), objected.
At the time, Lombard’s management said it was keen to raise roughly €50 million through the share offer.
The NDSF lifted its veto during the bank’s annual general meeting last June, when the bank also announced that it was appointing two NDSF nominees to its board of directors.
Established to manage government funds raised through its golden passports scheme, the NDSF has held a 49 per cent stake in Lombard Bank since August 2018.
When it announced its intention to become a bank shareholder, the fund had emphasised that this was "by no means a strategic investment" but intended solely to facilitate the exit of the bank’s previous majority shareholder, the Cyprus Popular Bank.
At the time, Lombard shares traded at roughly €2 (€1 when factoring in a 2022 share split). Lombard’s shares closed trading at €0.76c on Monday.
Other bank shareholders include Virtu Holdings (9.89%), First Gemini (5.31%) and LifeStar Insurance (4.9%).
Correction September 12, 2023: A previous version failed to note that Lombard undertook a 2-for-1 share split in October 2022.