Deiulemar case settlement sees BOV register pre-tax loss of €77 million in first half of 2022

Bank of Valletta’s decision to reach a settlement in the Deiulemar bankruptcy saga worth €182 million resulted in a pre-tax loss of €76.6 million for the first half of 2022, it announced in a presentation on its half-yearly financial statement.

Excluding the impact of the settlement, the bank would have made a pre-tax profit of €26.1 million, around €200,000 more than in the same period last year.

BOV reached a settlement deal in May of this year during the course of an appeal it filed against an Italian court which had ordered the bank to forfeit a €363 million precautionary security, plus court and legal fees, in a claim filed on behalf of 13,000 bondholders of Deiulemar group.

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What is the Deiulemar case?

The claim against Malta’s most important bank was filed by liquidators of the Deiulemar Group, and representatives of 13,000 Italian bondholders who lost their live savings due to a fraudulent scheme dating back to 2009.

The €363 million claim reflected the amount held in a trust opened by the owners of the now-collapsed shipping giant Deiulemar.

BOV had taken over this trust in 2009, while Deiulemar filed for bankruptcy in 2012, with losses of more than €800 million on its books. This led to seven people linked to the shipping giant being jailed.

In the liquidator’s claim against BOV, the bank was accused of allowing Deiulemar owners to set up three trusts in 2009 – Capital, Giano and Gilda, which they accuse the owners of illegally funnelling millions into.

In 2020, BOV had offered a €50 million out-of-court settlement to the bondholders, in return for the claim by liquidators being dropped, however this was rejected.

In its statement in May 2022 announcing the new settlement, BOV detailed that following the filing of its appeal, it engaged with the curators of the bankruptcy of the Deiulemar group to explore the possibility of finding a mutually satisfactory resolution out of court.

Under the deal, neither party admits to liability and the bank will pay €182.5 million to the curators in “full and final” settlement of the disputes and of all claims that had been made by the curators against the bank.