A troubled company service provider is set to renounce its investment in a prospective bank after the financial regulator cancelled its registration due to a raft of regulatory breaches.
E&S Group is one of nine shareholders in Laskaris Finance, which is awaiting approval for a banking licence from the MFSA and ECB.
Among the rollcall of investors in Laskaris Finance are a Maltese-passport buyer, the investment arm of a cryptocurrency exchange registered in the British Virgin Islands and a pair of lawyers involved in the Smart City residential project.
Pilatus Bank’s former risk manager, Antoniella Gauci, famously caught on camera sneaking out round the back of the bank with its former chairman and owner Ali Sadr on the night of the Egrant allegations, has been employed by Laskaris Finance.
An inquiry into potential criminal culpability by Pilatus Bank’s former employees at the shuttered bank is still ongoing following suspicions that the bank was being used by Azerbaijan’s ruling elite to launder dirty money.
The Laskaris bank project is being spearheaded by Roderick Psaila, who at the moment is the prospective bank’s CEO and majority shareholder.
Replying to questions by Times of Malta, a spokesman for Laskaris Finance said E&S had agreed to renounce its shareholding in Laskaris Finance following the MFSA’s regulatory action, which it is appealing.
“For the record, E&S currently hold 0.75 per cent in the company,” the spokesman said.
He said the shareholding structure of the proposed bank is meant to ensure that no shareholder at any point has any influence on the bank’s running.
“This diversified portfolio of shareholders will continue to increase with every capital raise in the coming months and years. Laskaris will be run by bankers, certainly not by its shareholders,” the spokesman said.
He said all shareholders in the proposed bank had been the subject of “an internal meticulous due diligence process” prior to their names being forwarded for regulatory approval.
Both Pilatus Bank and Satabank have faced heavy action by local regulators linked to their major shareholders.
Pilatus Bank had its licence revoked in 2018 after the arrest of Ali Sadr in the US on money-laundering and sanction-busting charges.
Satabank was fined a record €3m after it was found that the bank’s internal controls were short-circuited when dealing with its main client, a payment company owned by its director and co-owner Christo Georgiev.
The presence of a cryptocurrency exchange in Laskaris Finance’s shareholding structure raises the possibility that the prospective bank could venture into an area thus far deemed too risky by more established Maltese banks.
On this point, the Laskaris Finance spokesman said the proposed bank’s main focus would not be cryptocurrencies.
The bank’s precise business model has not been made public pending the licensing process.
Replying to questions about risk profile, the spokesman said banking was all about risk management.
“Laskaris has gone to great lengths to ensure that it has the structures in place to adequately manage risks, by recruiting an experienced and knowledgeable executive management team.
“Over and above this, the proposed bank has and will continue to invest in best of breed technology to assist in the risk management and compliance processes.”
Contacted by Times of Malta about Laskaris Finance’s potential red flags, a spokesperson for the MFSA said all banking applications were reviewed in line with applicable internal processes and procedures, based on ECB guidelines.
“Since the authority is bound to treat applications in the strictest of confidence, we would not be in a position to provide any details on specific applications,” the spokesperson said.