7.5% Mediterranean Bank plc 14.12.2019 (EUR)

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Mediterranean Bank plc - Prospectus dated 21 November 2012

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.

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 of this Issue constitute Additional Own Funds (Tier II capital) of the Bank  in terms of Banking Rule BR/03/2012 – Own Funds of Credit Institutions Authorised under the Banking Act (Cap. 371 of the laws of Malta).

The net proceeds will be used by the Issuer to meet part of its general financing requirements.

Status & Security

The Bonds are unsecured and Subordinated. Subordination means that the rights and claims of Bondholders in respect of the payment of capital and interest on the Bonds will, in the event of dissolution and winding up of the Issuer, rank after the claims of all unsubordinated debt and will not be repaid until all other unsubordinated debt outstanding at the time has been settled. The Bonds constitute the general, direct, unconditional, Subordinated and unsecured obligations of the Issuer and shall at all times rank equally and rateably without any priority or preference among themselves and with other Subordinated unsecured debt.

The Bonds shall rank subsequent to any other outstanding, unsubordinated and unsecured obligations of the Issuer, present and future. The Issuer may incur further borrowings or indebtedness and may create or permit to subsist other security interests upon the whole or any part of its present or future, undertaking, assets or revenues (including uncalled capital).

The Bonds shall also rank subsequent to any prior ranking security interest created for the purpose of securing the Issuer’s secured interbank funding lines and repurchase agreements. Such interbank funding lines and repurchase agreements are used to finance the Issuer’s investment portfolio.

Currency

Euro (€)

Coupon

7.5%

Amount Issued

€10,156,000

ISIN Code

MT0000551227

Maturity

The bonds will be redeemed at 100% (par) on 14 December 2019 or earlier in the case of a Regulatory Change Event by giving not less than thirty (30) nor more than sixty (60) days’ notice to bondholders.

A Regulatory Change Event shall be deemed to have occurred if Rule BR/03 is replaced or materially amended in respect of credit institutions by New Capital Regulations, the result of which is or would be that the Bonds are not or would no longer be eligible to qualify in whole or in part for inclusion (save where such exclusion is only as a result of any applicable limitation on the amount of such capital) in the Lower Tier 2 Capital or Tier 2 Capital, as the case may be, of the Issuer.

Interest Payment

Annually on 14 December

XD Date

29 November

Listing

Official List

Directors

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

 

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