A company that bought a portfolio of 700 loans from Bank of Valletta to the tune of €26 million, is linked to the bank’s former chairperson Deo Scerri.

A report by The Shift revealed that the loans were purchased by 3514 Capital SCC, a private equity investor, through a subsidiary company.

Scerri, who served as BOV chairperson between 2016 and 2020, currently sits on the company’s investment committee.

In its report, The Shift estimates the true value of the loans to be over €100 million, four times the amount for which they were sold.

BOV had first announced its intention to sell the loan portfolio in October, later saying that it had been sold in December.

Many of the loans are believed to have been in default for over five years, but the bank has refused to confirm the value of the loans, citing “commercial sensitivity”.

At the time of the sale, the bank had said the value of the loans on the bank’s balance sheet was in the region of €5 million.

The bank argued that the selling of non-performing loans below their value is a standard banking practice, effectively allowing the bank to cut its losses and avoid the lengthy and expensive judicial process needed to recover funds.

BOV confirmed that the loans were sold to 3514 Capital SCC, telling The Shift that the company was “selected based on a formal offer submitted as part of a rigorous bidding process conducted by the bank in which multiple interested parties participated”.

Scerri, on his part, brushed off concerns over a potential conflict of interest raised by his previous role at the helm of the bank, saying that he has no role in the company’s acquisition strategy and that he was “not involved in the day-to-day operations of BOV” when at the bank.