Bank of Valletta expected to announce Rick Hunkin as its next CEO

Bank of Valletta is expected to announce former Northern Rock executive Rick Hunkin as its next chief executive officer, as outgoing boss Mario Mallia steps down in November.

The move marks a first for the bank, which is 25% owned by the Maltese government, which head-hunted its first ever foreign CEO as opposed to picking rank-and-file executives.

Englishman Hunkin has been chief risk officer at Chetwood Financial since April 2019, and held the same role at his former post with Provident Financial, Royal Bank of Scotland Williams & Glyn unit, and Northern Rock, according to his LinkedIn page.

In 1998, Hunkin was a risk director for the National Bank of New Zealand, and later moved to Goldfish Bank and C&G plc, a joint venture where he managed Lloyd’s TSB’s interests. He moved to GE Money as chief risk officer in 2006, before arriving at Northern Rock in 2008 where he was hired to manage the renationalised bank until its return to private ownership.

He then became chief risk officer and director of Tesco Bank in 2011, moving to RBS in 2014 and to Provident in November 2017, before his move to Chetwood earlier this year.

A source at the bank said Hunkin’s appointment comes in the wake of pressures from the European Central Bank to have BOV select a boss unrelated to fund management business, and who fits the bank’s conservative risk appetite.

Bank of Valletta, one of Malta’s core domestic banks and a major lender for home-owners, was hit by a series of negative news in the last years.

With its credit rating downgrade by S&P stepped down to BBB-, the bank last February was forced to suspend all its operations after hackers broke into its IT system and moved €13 million into foreign accounts.

In 2019, BOV put aside €75 million to cater for ongoing litigation which cut the group’s profits and left shareholders without a cash dividend for 2018.

The litigation provision announced last year came after an Italian court issued a freezing order on €363 million worth of assets over the Deiulemar case, a bankrupt shipping company whose bondholders insist their savings were held in a trust at BOV by the company owners.

The bank is also fending off another headache from the Swedish pensions regulator, which is holding the bank responsible for losses incurred by Swedish savers who invested their cash with a Malta-run pension, Falcon Funds, whose custodian was Bank of Valletta.

Malta’s financial services industry now has to reckon with a momentous decision by Bank of Valletta to stop its custodian services for Malta-based funds, which hold nothing less than four billion in assets.

The bank sent out its pre-notification letters to financial services companies which run so-called UCITS funds back in July, announcing that eventually it will be terminating its custodian services.

As a custodian, BOV offered a very specialised service – mandated by EU rules – which ensures that funds which invest customers’ savings in bonds or blue-chip stocks, are liquid enough to ensure the redemption of their investments.

This crucial surveillance role also ensures that investment and pensions funds are respecting their own rules when investing their clients’ cash in liquid investments.

BOV assumed its role as Malta’s first port of call for custodian services when Deutsche Bank closed down its services on the island, with most of its custodian business migrating to BOV.

UCITs funds with dollar investments are especially concerned, due to Malta’s own problems, with a shrinking network of US correspondent banks.

Bank of Valletta had already announced last year that it was reconsidering its risk appetite by taking all steps to close its trust business, and undertake a strategic review of the custody business and evaluate its client base. “The bank will be undergoing a de-risking exercise by cutting down on non-core business that delivers very little profit for the risk involved,” BOV chairman Deo Scerri has said.

Recent misadventures with its own La Valette funds, which led to a multi-million payout ordered by the financial services regulator and the financial services arbiter, has also forced BOV to take a closer look towards its own internal controls.

“The bank has to hive off people who don’t perform… they’re given great packages to the detriment of long-serving colleagues, and despite not performing, are not fired. This bad vibe is killing the bank slowly,” one banking veteran who spoke to MaltaToday on condition of anonymity said.



Published: 02 October 2019



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