6.25% Mediterranean Bank plc 30.10.15

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Mediterranean Bank plc - Prospectus dated 13 September 2010

The Company

Mediterranean Bank is a specialist bank focusing on wealth management, savings and investments. The Bank was established in June 2004 and was licensed as a Maltese credit institution (regulated by the Malta Financial Services Authority) in July 2005. In November 2008, Mediterranean Bank breached its obligation to maintain the obligatory level of minimum own funds and was therefore fined. The MFSA also imposed restrictions on the Bank’s license, including restrictions on deposit taking, lending facilities and on capital adequacy and liquidity asset ratios.

In July 2009, the Bank was acquired by new shareholders indirectly through the holding company Medifin Holdings Ltd. Medifin was acquired by AnaCap Financial Partners II L.P (91.4%), with the balance held by members of the top management team of Mediterranean Bank plc. AnaCap Financial Partners II L.P is a UK private equity firm specialising in financial services. Following this acquisition, the Bank received a capital injection of €19.2 million from Medifin Holding Ltd and on 11 August 2009 the MFSA removed the restrictions on the Bank’s license after the level of own funds was increased over the minimum requirement of €5 million. Mediterranean Bank also holds a category 2 and category 4 license issued by the MFSA to provide any investment service, to hold or control clients’ money and to act as trustees or custodians of collective investment schemes.

Since the acquisition was concluded in July 2009, the Bank has implemented policies, procedures and operations designed to address the issues raised by the recent financial crisis and to address as robustly as possible the risks and potential risks than have become more apparent.

Mediterranean Bank’s current Head Office is located in Valletta. Mediterranean Bank’s current Head Office is located in Valletta. However, on 30 August 2010, the Bank opened its first branch in Sliema followed by another in Paola.

The Bank offers the following services:

  • Receipt and acceptance of customers’ monies for deposit in savings and fixed term deposit accounts;
  • Trading for account of customers in foreign exchange;
  • Provision of money transmission services;
  • Provision of safe custody services with a wide range of custom-tailored solutions as well as administration and safekeeping of securities;
  • Provision of investment advice to customers;
  • Provision of portfolio management services.

The Bank’s Business Strategy

Since the acquisition of Mediterranean Bank plc by AnaCap Financial, the Bank adopted a new business plan with the aim of positioning itself as a savings and wealth management institution, focused both domestically in Malta and internationally. The Bank continues to implement a business plan which is built on sustaining its long-term profitability and allowing it to develop its customer base in the mass affluent and high net worth market sectors especially following the acquisition of Charts Investment Management Services Ltd – a local stockbroking, wealth management and corporate advisory firm. Mediterranean Bank’s profitability has so far been achieved through the creation of a high quality, liquid investment portfolio.

The Bank’s assets are comprised of high credit quality financial instruments, principally issued by EU entities and all of which are on the List of Eligible Collateral by the European Central Bank which requires that “assets must meet high credit standards”. All investments in the portfolio (namely Public sector bonds, senior financial institution bonds and mortgage bonds) carry an assigned investment grade rating by at least one of the internationally recognized statistical rating agencies such as Standard & Poor’s, Moody’s Investor Services and Fitch.

This investment portfolio was largely funded by the international wholesale banking markets including access to the European Central Bank and other banks to fund the growth of its business. However the Bank is currently implementing a strategy to broaden its deposit base in both the local and international markets, enabling it to expand its product offering and nurture its client base.

Use of Proceeds

The proceeds raised from this bond issue will be used for the general corporate and investment purposes of the Bank and may include the following without any priority among themselves:

  • to grow its investment portfolio in line with its investment strategy by investing in additional investment grade securities;
  • to refinance the Bank’s general liabilities as they become due;
  • to enhance the Bank’s available liquidity.

Status & Security

The bonds constitute the general, direct, unconditional and unsecured obligations of the Bank and shall at all times rank pari passu, without any priority or preference among themselves and with other unsecured debt. The bonds shall rank junior and subsequent to any prior ranking security interest created for the purpose of securing the Bank’s secured interbank funding lines and repurchase agreements. Such interbank funding lines and repurchase agreements are used to finance the Bank’s investment portfolio.

Privileges & Hypothecs

Mediterranean Bank finances its investment portfolio in the interbank market using secured funding lines and repurchase agreements. Pursuant to such arrangements, investment securities being financed are pledged to the financing counterparty. Creditors of the Bank providing such financing and benefitting from the related pledges would rank prior to bondholders in respect of the pledged assets.

Coupon

6.25%

Amount Issued

€20,000,000

ISIN Code

MT0000551201

Maturity

The bonds will be redeemed at 100% (par) on 30 October 2015.

Interest Payment

Annually on 30 October

XD Date

15 October

Listing

Official List

Directors

Francis Vassallo, Finlay McFadyen, Peter Cartwright, Mark Watson, Henry Schmeltzer, Joaquin Vicent, Vincent Chatard.

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