Bank of Valletta - The Origins of Bank of Valletta

The Origins of Bank of Valletta

With the advent of British rule in Malta, a group of English and Maltese merchants set up the first commercial bank in the first decade of the nineteenth century during the governance of Civil Commissioner Sir Alexander John Ball. The Anglo-Maltese Bank commenced operations on 23 June 1809 in the 'Commercial Rooms', then also known as 'Le Stanze', on the ground floor of the University of Studies in Strada Mercanti, Valletta. These Commercial Rooms had a separate access from 113, Strada S. Paolo. The first Cassiere (Cashier) and General Manager of the Anglo-Maltese Bank was the Maltese John Vella and its President was William Higgins, an Englishman who set up business in Malta soon after the publication of the Order of His Majesty in Council of the 15th March 1809. This Order in Council had given Malta an especially favoured status for trading in the Mediterranean. At the same time, it decreed that two thirds of the cargo on ships leaving Malta was to be of British origin or imported from British dominions and that one third of the crew had to be composed of British subjects.

The Banco di Malta, established on 1 May 1812 and operating from 59, Strada S. Domenico saw George Thomas Jackson as President and Agostino Portelli as Vice President. Thomas Jackson had settled in Malta prior to the Order in Council of March 1809 and had become a prominent member of the English mercantile community on the island where in 1812, the importation of British goods had risen to Stg 5,000,000 and amounted to twenty five percent of the total exports to Europe. Agostino Portelli later founded the Chamber of Commerce and was elected President of the Chamber from 1848 to 1851. He was also appointed Knight Commander of St. Michael and St. George in 1850.

The third bank to be set up was B. Tagliaferro e Figli founded also in 1812. This bank, operating from 106 Strada S. Giovanni belonged wholly to Biagio Tagliaferro, a Genoese merchant who had a thriving ship chandelling business and had his own ships engaged principally in the transhipment of grain from Crimean ports. Josef Scicluna et Fils, another bank set up in 1830, with premises at 122, Strada Teatro, was owned by a prominent family of merchants involved in the importation of grain and other merchandise.

For a very long time the Maltese Banks and the mercantile community were burdened with a confused currency and a complicated monetary system. During the early years of British rule the legal circulating currency medium in Malta included the remaining coins of the Order of St. John, which relinquished the island to Napoleon in 1798 as well as Sicilian and Spanish silver coins.

To this pot-pourri of coins, the Lords Commissioners of the Treasury in London added their own coins and in subsequent years introduced or allowed other foreign coins such as Mexican, South American and Hungarian Dollars to circulate in Malta. Steps for the regularisation of the local monetary system were first taken in June 1825, when British Copper and Silver coins were declared legal tender and the copper coins of the Order were withdrawn. Gold Sovereigns and Half Sovereigns were introduced in 1826. British silver currency, however, was then wholly unserviceable in operations with the markets of the Mediterranean, where the preferred coins, like the Spanish and Sicilian dollars, had a corresponding value in proportion to their weight of fine silver. Consequently, although Government Departments after December 1825 had been ordered and actually began to keep their accounts in Sterling, the Banks and the merchants, for a long time continued to conduct their transactions in Maltese currency (Scudo, Tari' and Grani).

Moreover, the Anglo Maltese Bank and the Banco di Malta, soon after they were established, began to issue their own promissory banknotes (payable at sight) at first in Scudi denominations and subsequently in Sterling. Although these notes were not accepted by Government, they were widely accepted and recognised by the public and the mercantile community, even though these notes were not guaranteed by the shareholders of the Banks. Although the British Government demonetised all foreign coins and British currency was established as the only legal tender, the Sicilian Dollar continued to dominate the circulating medium until their final withdrawal in 1886 when, by an Order in Council, British coins became definitely the sole legal currency in Malta.

In 1857, the Anglo-Maltese Bank and the Banco di Malta moved their offices to the ground floor of the newly erected Exchange Buildings in Strada Reale. Apart from these two Banks, B Tagliaferro e Figli and Josef Scicluna et Fils, a number of other Banks including James Bell & Company and the Anglo Egyptian Banking Company Limited were set up in Malta before the end of the nineteenth century. However, it was the first aforementioned four pioneers of banking in Malta who subsequently merged. The two oldest banks, the Anglo Maltese Bank and the Banco di Malta, were amalgamated in January 1946 under the name National Bank of Malta with Comm. Antonio Cassar-Torreggiani OBE as Chairman. In 1949, Sciclunas Bank was affiliated to the newly established Bank which, twelve years later, moved to a new Head Office at 45, Kingsway, Valletta. In 1969 ninety per cent of the private bank of B. Tagliaferro & Sons, then operating under the name of Tagliaferro Bank Limited, was bought by the National Bank of Malta.

As one of the leading financial institutions, the National Bank of Malta made a rapid expansion in branch network and provided more banking facilities to an ever increasing number of customers as well as financing a number of large projects initiated during the extremely difficult post Independence period.

In 1973, following a run on the National Bank and its subsidiary Tagliaferro Bank, the Government intervened and a three-man council of administration was appointed after Parliament passed the 'National and Tagliaferro Banks (Temporary Provision) Act 1973'. On 22 March 1974 the Prime Minister announced the setting up of the Bank of Valletta. The new Bank, which took over the assets and liabilities of the National Bank Group, commenced operations on 25 March 1974. The Government, injected Lm3.3 million (equivalent to €7.7 million) into the new Bank and obtained controlling interest by retaining sixty per cent of the capital. The balance (40%) was taken up by the Malta Development Corporation which, in turn, sold twenty per cent to the Banco di Sicilia and ten per cent to the Maltese public. In 1986, the Bank inaugurated its first overseas representative office.

In 1990, the Government's stake in the Bank was reduced to 51.2% as 4.9 million shares were issued and offered to the public. In the same year, following the amendments to the Banking Act 1970 (Act No. XXVI of 1990) whereby Banks were allowed to establish their own long term lending subsidiary, Bank of Valletta launched its fully owned investment bank - the subsidiary Valletta Investment Bank.

In 1992, Bank of Valletta International Limited started operating. This wholly owned International banking subsidiary of the Bank of Valletta Group was Malta's first Offshore Bank. 1992 was also the year when Bank of Valletta became the first bank to be listed on the Malta Stock Exchange.

Bank of Valletta p.l.c. was the first banking institution in Malta to take up the opportunities that were created as a result of the 1994 Financial Services legislation by setting up Valletta Fund Management Limited (“VFM”) in 1995. This Company is jointly owned by Bank of Valletta p.l.c and Insight Investment Management Limited, one of the UK's largest asset managers. VFM has throughout the years launched a wide range of domestic and international investment funds providing income and growth opportunities in the world's capital markets offering clients a varied range of investment solutions. VFM is licensed by the Malta Financial Services Authority (“MFSA”) to provide Investment Services Business for Collective Investment Schemes in Malta and to operate as a “Maltese Company” pursuant to the Undertakings for Collective Investment in Transferable Securies regulations (“UCITS”).

In September 2000, BOV set up its stockbroking arm, namely BOV Stockbrokers Limited (“BOVSL”). Bank of Valletta International Limited, Valletta Investment Bank Limited, Card Services Limited and BOVSL were merged within Bank of Valletta p.l.c. The Bank has also implemented a relationship banking strategy where more focus is being placed on customer requirements. Significant investment has gone into introducing state-of-the-art information technology such as internet, telephone and mobile banking.

BOV continued to consolidate its internationalisation strategy through the opening of other representative offices in the Euro-Mediterranean region namely Cairo-Egypt (until 2011), Tripoli-Libya and Tunis-Tunisia (until 2011). Moreover, through its Investment Banking Unit, the Bank has been very active on the capital markets. In December 2003, BOV acted as manager, underwriter, registrar and paying agent for the first European Investment Bank Lm10 million (equivalent to €23.3 million) bond issue. With Malta’s accession into the European Union, Bank of Valletta has become an active member of the European Savings Banks Group. Meanwhile, in August 2006 the Bank set up a fully-fledged Trustee Services Unit.

The Bank offers its services through a network of over 45 branches and agencies located around the Maltese Islands, as well as its overseas offices. Today, the Bank's BOV Centre is located in Santa Venera.

On 6 October 2006, BOV announced the setting up of a new subsidiary company - Valletta Fund Services Limited- which is in the fund administration business.