Bank of Valletta’s chief executive has agreed to move on after concerns over a spending spree on foreign consultancies and a deteriorating relationship with members of the bank’s senior management.
In the last quarter of 2021, Rick Hunkin and BOV’s board of directors reached a mutual agreement for him to move on from the bank.
The plan is for Hunkin to leave later this year as part of an exit strategy to save him and the bank from “unnecessary attention”, sources said.
It is understood that Hunkin, who has been at the helm of the island’s largest bank since 2020, had raised eyebrows in recent months over concerns of his spending on foreign consultants.
He gave the thumbs up for six foreign consultants to be engaged on contracts that are set to cost the bank hundreds of thousands of euros this year alone.
The contracts were given the green light by Hunkin at a time when the bank was engaged in a cost-cutting exercise and shareholders are understood to have been unable to reconcile the spend with the bank’s results.
The sources said the bank’s directors had also raised concerns about a consultancy firm engaged last year which is also set to command a hefty fee.
“The bank certainly improved under Rick but this spend could not be justified given the bank’s status – perhaps it was a cultural difference,” a source privy to the internal discussions at the bank told Times of Malta.
The source said that the bank had gone “from one extreme to another” over the past two years.
“Before Rick was engaged, the bank was not being run in the way a commercial bank ought to have been. But, then, it seems we went from one extreme to another and, ultimately, the spending was just too high, bordering on excessive at times,” the source said.
Another source said there were also concerns that Bank of Valletta was spending heavily and had still not managed to avoid a huge fine last year.
In December 2021, BOV was slapped with a massive €2.6 million fine by the FIAU after failing to properly identify thousands of corporate customers.
However, others said the fine was the result of long-standing legacy issues and putting it on Hunkin’s leadership was not entirely fair. The sources added that Hunkin also had a rocky relationship with key members of the bank’s top brass.
This, they said, had stemmed from his efforts to transform the bank’s operations, with longstanding members of BOV’s senior management feeling sidelined.
The board of directors was called in by the government, a minority shareholder in BOV, and given a dress down a few months ago, a bank source said, with another government source later confirming.
It is not known if the costly consultancy contracts entered into by BOV will be rescinded.
A BOV spokesperson yesterday said Hunkin’s contract was for a fixed period of three years, expiring in the course of 2022.
“In line with good succession planning and execution, the CEO and board have discussed and are implementing a succession plan which is intended to identify and put in place the best available talent in good time before the natural cessation of Mr Hunkin’s contract,” the spokesperson said.
He added that the bank has registered “significant progress over the past two years in an environment of unprecedented headwinds”.
However, the bank spokesperson added that the bank “requires further transformation and restructuring to continue playing a central role in the Maltese economy and society”.
Formerly an executive at the UK’s Northern Rock Bank, Hunkin joined BOV as its first foreign chief executive.
According to BOV’s 2020 annual report, Hunkin is eligible for a package of €459,000 in salaries and bonuses.