Updated | Government, shareholder file appeals to National Bank of Malta compensation rulings

51 years after the National Bank of Malta was closed down, its shareholders' ongoing legal struggle for compensation took another turn  with appeals being filed by both the Government and the heir of one of the bank’s major shareholders on Monday.

Earlier today, the Government filed an appeal against decisions which left the heirs and shareholders of the defunct National Bank of Malta entitled to a total of €111 million in compensation.

Last March, Mr Justice Joseph R. Micallef ruled in favour of two cases deaing with the same constitutional claim filed by two groups of NBM shareholders back in 1992, for the government to pay €44 million in compensation to 33 separate shareholding claimants, and €66 million to another group of 49.

The National Bank was nationalised after a run on its reserves in December 1972 by depositors that were spurred by massive withdrawals from government-owned companies.

On Monday, the government contended that its intervention in the National Bank by establishing another bank was necessary to prevent an economic catastrophe, safeguard depositors' funds, and preserve jobs.

Government asserted that the judgments adopted a “negative vision”, punishing current public finances for averting an economic crisis in 1973, as if the actions taken were unwarranted.

The government elaborated that in 1972, the National Bank had already experienced significant losses in capital and deposits, and by a year later, it was unable to contain a bank run. 

Highlighting the shareholders' reluctance to inject their own capital to revive the bank and the impracticality of the Central Bank acting as a Lender of Last Resort, government argued that such measures would not have stemmed the deposit run and may have exacerbated it.

Moreover, government underscored that the invitation to assume control of the bank originated from the bank's proprietors themselves, who sought to safeguard their own deposits and assets within the bank.

In its appeal, government expressed dissatisfaction with the court's reliance on a single expert opinion while disregarding the findings of another expert, despite acknowledging the latter's credibility. The excluded expert had concluded that the National Bank's shares in 1973 were essentially worthless, and the bank was insolvent.

The Government concluded by saying that the courts could have rejected the cases due to their abusive motives.

Major shareholder objects to creditors’ equal awards

On Monday afternoon, another appeal was filed on behalf of Joseph Gauci, one the plaintiffs in the cases against National Bank, by lawyers José Herrera and David Camilleri. 

The appeal objects to the court’s decision to divide the compensation equally amongst the number of shareholders, irrespective of the amount of shares held. 

Gauci's shareholding is more substantial than many of the other plaintiffs, argued the lawyers.