The National Development and Social Fund - the government-appointed fund that gets its money from the sale of passports - has entered into a share purchase agreement to acquire 49.01% of the shares of Lombard Bank from Cyprus Popular Bank.

The acquisition is subject to approval by the Malta Financial Services Authority in terms of the Banking Act.

The fund will thus become the biggest shareholder in the bank and Lombard will become the bank with the largest government shareholding.

However, the fund's Board of Governors explained that this acquisition is "by no means a strategic investment" but intended solely to facilitate the exit of the Cypriot major shareholder of Lombard Bank Malta.

"It is a measure taken by the Board of Governors of the NDSF in terms of its founding regulations to support business and enterprise, in this case an important operator in the domestic banking sector."

It added that it does not intend to increase its holding in Lombard Bank nor to act in concert with any other shareholders.

"On the contrary, the NDSF will seek to reduce its proposed shareholding in the bank in an orderly manner, at the right market conditions and by agreement with the regulatory authorities.

"In the meantime, the Board of Governors further confirms that the NDSF has no intention of exerting influence on the operations of the bank. The acquisition will therefore not result in a change in control of the bank."

The announcement came just hours after Global Finance said it was maintaining its bid for the bank, despite admitting that York Capital was not involved in its bid, contradicting a statement issued on Monday.  

In March 2013 Cyprus Popular Bank Public Co. Ltd was placed in resolution, kicking off a process to dispose of certain assets including its shareholding in Lombard Bank Malta.