Bank of Valletta spending ‘exorbitant’ fees on consultants

One of Malta’s largest financial institutions, the state-controlled Bank of Valletta, is paying external consultants as much as €2,000 per day for various services. Opposition figures have asserted the fees are “unnecessary”, however the bank has defended its spending as filling areas where it requires niche skills.

The Bank of Valletta is a Maltese bank and financial services company, headquartered in Santa Venera. As the oldest established financial services provider in Malta, it is also the country’s largest lender. The bank has 30+ branches, six regional business centres, and a wealth management arm located around the Maltese Islands. Meanwhile, it has representative offices in the UK, Australia, Belgium and Italy.

Recent years have seen the bank face various reputational hits. The bank has been a political pawn passed between Malta’s ruling parties for decades – and in 2013 when the Labour Party returned to power, the new Government installed a number of sympathetic figures in the bank’s hierarchy, including the financial auditor of the Labour Party, Deo Scerri, who served as the bank’s chair for several years.

This means when the Maltese Government commenced its controversial Golden Passports scandal, the Bank of Valletta became entangled, as large numbers of foreign nationals began transferring money to Malta. Meanwhile, other scandals tarred the bank, with press claims that commercial gaming companies allegedly infiltrated by the Italian mafia were using the bank to move large amounts of funds.

The bank also became entangled in the Pilatus Bank scandal – the now-shuttered lender that’s been described as a money laundering machine – which used Bank of Valletta as its correspondent bank. In 2019, this saw the bank fined some €60,000 by the country’s financial watchdog for breaches related to money laundering.

Amid these ongoing scandals, there has been a significant drop in the bank’s value, with shares currently trading at just €0.85 per share. Coupling this 40% plunge from 2017 levels, Covid-19 and the global downward economic trend have also hit the bank’s prospects. As the lender attempts to turn its fortunes around, as public entities often do, it has brought on board expertise from the private sector.

Consultants to the rescue?

A recent report from Maltese news site The Shift, the Bank of Valletta is currently spending millions on high-end consultants to help plug skill-gaps in its management team. According to the outlet, seven foreign consultants currently receive between €1,500 and €2,000 per day, with senior bank officials having anonymously alleged the consultants were all hand-picked by the bank’s incumbent CEO, Rick Hunkin.

The first-ever foreign CEO of the Maltese bank, Hunkin was hired at the start of 2020, and the sources also suggested the consultants are all close acquaintances of Hunkin’s. As alleged by the sources, the consultants were connections made by Hunkin at British and other financial institutions, where he previously worked.

As reported by The Shift, two of these consultants have been handed two-year contracts, at €2,000 a-day for their work. Those individual contracts will cost the bank almost €1 million each. The contracts of the remaining five meanwhile vary between 12 and 24 months – in some cases they have already had their terms extended by one year – at a pay of €1,500 per day.

Using these figures to calculate an estimated total, the total bill for the seven consultants will end up at around €5 million in fees by the end of their contracts.

The sources speaking to The Shift were not fans of Hunkin’s policy of outsourcing. They described the fees as “exorbitant” and “unnecessary”. However, the bank itself defended its decision, arguing that the consultants fill in areas where no local expertise exists.

The Bank of Valletta declined to give specific details, citing “commercial sensitivity”, but a spokesperson did note that the bank engages “local and international consultants who it deems to be specialised in the area of expertise”.

The spokesperson added that the bank only does this “when it cannot make use of its own internal resources”. Arguing the case for premium fees for such expertise, they stated contracts were handed out through proper channels, contradicting the allegations of the insiders. Meanwhile, they concluded that the fees charged were “commensurate with the fees that experienced consultants in these areas of specialisation charge,” while such contracts are “bound by agreed deliverables”.