The agency which administers government income from the sale of passports on Thursday halted attempts by Lombard Bank’s board of directors to issue new ordinary shares and increase the bank's share capital.

In a statement, the National Development and Social Fund, which holds 49.01% of the issued share capital in the bank said the directors could not be allowed to issue and allot shares without first consulting shareholders.

"The NDSF believes that the bank’s board of directors should not have the authorisation to issue and allot shares in the bank up to the authorised share capital of the bank with such rights, restrictions and terms and conditions as the board of directors, in their absolute discretion, deem fit."

The statement was issued following an Extraordinary General Meeting called by the bank.

The NDSF voted in favour of three resolutions, including the redenomination of the bank’s 25c shares into 12c5 to redesignate the €20 million authorised share capital from 80 million shares to 160 million ordinary shares.

The issued share capital of the bank was also redesignated from €11,340,966.75 divided into 45,363,867 ordinary shares having a nominal value of €0.25 each to €11,340,966.75 divided into 90,727,734 ordinary shares having a nominal value of €0.125 each.

It said its board of governors did not have the obligation to disclose the reasoning behind their voting - they had only chosen to do so "for the sake of transparency". 

"First and foremost, the fund wishes to make it clear that as a matter of principle, it is in favour of the bank strengthening its capital base."

However, it believed that any issuance and allotment of shares in the bank should be accompanied by a presentation to the bank’s shareholders, including the reasons for, and the terms and conditions of the issue and allotment; and, subsequently, the approval of the general meeting on the basis thereof. 

It said its vote should be interpreted as a vote in the interest of all the bank’s shareholders and as a prudent measure taken to ensure that the correct level of transparency and shareholder participation is observed, and the rights of the bank’s shareholders maintained.