APS Bank has officially withdrawn its formal bid to acquire HSBC Bank Malta, in tandem withdrawing from a formal due diligence process. Industry sources said that up until recently APS Bank was widely regarded as the front-runner to acquire HSBC Malta.

The decision comes just weeks after APS had announced the commencement of a formal due diligence process related to the potential acquisition of HSBC’s Maltese operations.

In a company announcement posted on Thursday (today), APS Bank said it informed HSBC Malta parent firm HSBC Holding that it is "regrettably withdrawing" from the bidding process. 

The bank clarified that the withdrawal is the result of "confidential information external to the due diligence exercise". 

The majority-Church-owned institution’s expression of interest – first reported exclusively by WhosWho.mt in September 2024 – sparked significant debate, generating both support and criticism from stakeholders across Malta’s economic and political landscape.

Finance Minister Clyde Caruana has publicly voiced his opposition to any potential market concentration that would position APS Bank as the second-largest player in the domestic banking sector. Instead, he has stated a preference for an established international entity to take over HSBC Malta’s operations.

Given that any such acquisition would require approval from the Malta Financial Services Authority (MFSA) – whose Board of Governors is appointed by the Government – the Minister’s position carries considerable weight.

HSBC’s ongoing search for a buyer has recently attracted fresh interest, with Hungary’s OTP Bank and, separately, a consortium of local investors reportedly among the potential contenders.

APS Bank's withdrawal is a notable development, particularly as it was the only prospective buyer to have publicly confirmed its interest. The bank had previously appointed merger and acquisition advisors to support its bid, underscoring the seriousness of its approach.

In Thursday's announcement, APS Bank noted that its Board of Directors and Executive Team, supported by their local and international advisers, had been optimistic about pursuing this potential acquisition.

"In particular, the potential deal was an opportunity to promote consolidation in the banking sector, in line with European initiatives, with a view to creating an enlarged local bank to serve the market in the Maltese Islands," it said. 

The statement continued: "APS Bank holds the management and employees of HSBC Bank Malta plc in high esteem and believes that a combination of the two entities could have been an attractive strategic initiative, capable of delivering benefits across the stakeholder universe. Further, the investor community, local and international, had warmly responded to invitations from the Bank and its advisers to discuss the potential transaction."

With APS Bank now officially out of the running, the future of HSBC Bank Malta remains uncertain, as the search for a suitable acquirer continues. It is widely believed that the Government wants a reputable international bank to take over HSBC Malta, as it believes that such move is in the national’s economic interest.