Bank of Valletta has defended its decision to make a €50 million offer to Italian bondholders to drop a case they have filed against the bank, saying that the settlement bid made commercial sense.

The €50 million was rejected by claimants as "insufficient and inadmissible", Italian media reported, and the case against the bank, which bondholders of the defunct Deiulemar shipping company have filed in Torre d’Annunziata, Naples, will go ahead.

Deiulemar shareholders were found guilty of fraud and in 2014 seven members of the company's founders were jailed by an Italian court. BOV had taken over a trust that held €363 million in the company's assets in 2009. 

When the company went bankrupt, bondholders whose savings were wiped out turned to BOV.  

BOV insists it never held the company's funds and says that its lawyers have concluded that the case against it is without merit. It also says that it has had that view “independently confirmed by Italy’s leading legal authority in this area”.

But the bank argues that it cannot be guaranteed a fair hearing if the case is heard before the Italian courts. BOV has already seen an Italian court freeze €363 million in its assets as part of the case and the bank has filed proceedings before the European Court of Human Rights to that effect. 

In a company announcement issued on Friday, the bank told its shareholders that it had made the €50 million out-of-court settlement offer in an attempt to find a “pragmatic, commercial solution” to a messy problem.

Given the risks, it said, “it made commercial sense to offer a settlement to the curators in order to close this matter... the offer was not a result of any change in the Bank’s conviction that the claim is entirely unmeritorious”.

The bank said that it had not publicly announced the offer because it had been made on a confidential basis but been subsequently leaked in Torre Annunziata.