Govt says Savings Bank’s £100m investment in stadium will be ‘very low risk’, as Opposition seeks details on deal
The Gibraltar Savings Bank’s funding for the GFA’s National Stadium project will be “in the region of” £100m over an 18-month period, the Gibraltar Government said on Monday, insisting it was a “very low risk” investment that would generate returns for the bank.
Under the agreement, the GSB would provide an investment through the acquisition of loan notes to be issued by the GFA, at an interest rate that would deliver “a small but meaningful profit for the bank”.
“The investment in the loan notes is secured on the assets of the issuing company, which is the GFA's Gibraltar National Stadium company which already benefits from ownership of the land on which the stadium is built - valued at over £16m - as well as the ancillary aspects of it,” No.6 Convent Place told the Chronicle in an emailed response to questions.
The Government was responding after plans for a major stadium and residential development funded as an investment by the GSB were announced on Saturday night during half-time in the match between Gibraltar and Andorra.
The plans were unveiled in a video that included a presentation by Sir Joe Bossano, the Minister for Inward Investment and chairman of the GSB.
The 8,000-seat stadium project will include a 92-unit residential project, retail and office units and a business centre, and was described by Sir Joe as future “shop window of new Gibraltar post-Brexit”.
But on Saturday Sir Joe gave scant details of the investment for the scheme, which has drawn a mixed response from many in the community.
While some people have welcomed it, others have questioned its scale and whether such a large stadium is needed.
The GSD meanwhile raised multiple questions about how the GSB investment would be structured and who would be involved in the scheme, asking too whether the GSB’s funds might be better targeted at a time when Gibraltar’s public finances were crippled and many people were struggling because of the cost-of-living crisis.
On Monday, the Government told the Chronicle that people with savings in the GSB should not be concerned about the plan to invest in the stadium, which Sir Joe on Saturday said was a sponsored project under Gibraltar’s National Economic Plan that sought to generate economic activity for the benefit of the community.
“This investment by the GSB is very low risk on any analysis,” the Government said.
“There is no legitimate reason whatsoever for any depositor with savings in the Gibraltar Savings Bank to have any concerns about this investment in loan notes which represents a very low risk.”
The Government said the GSB had over £1.5 billion in assets, of which £55m was accrued profits.
No.6 said the Government had not removed profits from the GSB since the GSLP/Liberals entered government in 2011, when the bank had reserves of £1,000.
The GSB has £200m plus invested in UK stock exchange securities and over £400m in cash deposited in local banks, the Government said.
“In addition, the law provides a 100% Government guarantee for the repayment of any maturing deposits should the GSB not be able to repay when the maturity date happens,” the Government said in its response.
“This has never been the case in the past and there is no possibility that this will be happening in the future, but the guarantee is there as an ultimate safeguard.”
“The investment by the GSB in the secured GFA loan notes will provide returns and profits from the underlying real estate being developed for rent and/or sale at commercial values to be able to easily repay all monies invested through the redemption of the loan notes to the Savings Bank with interest and to fully fund the new stadium for the GFA.”
No.6 added too that “as far as the Government is aware” the funding by UEFA/FIFA of £16m was used by the GFA to purchase the existing land.
It said further monies “will likely be made available” to the GFA by UEFA/FIFA, which will be used by the GFA to fund the financing and development costs of the stadium.
The announcement on Saturday drew a battery of questions from the GSD, which asked why the GSB should be involved in funding a project that the GFA had in 2016 announced would be built with monies from UEFA.
“What has happened to that promise?” the opposition party said.
The GSD noted too that in 2017, the Gibraltar Government sold the Victoria Stadium to the GFA for £16.5m and said the GFA would invest around £15m in its redevelopment.
At the time, the Government said Gibraltar would have a Gibraltar National Stadium “at no cost at all to the taxpayer”.
The GSD asked whether UEFA would still make a contribution to the project, questioning why the stadium was no longer being built exclusively with UEFA funds at no cost to the taxpayer, and would instead rely on monies from the GSB.
“We appreciate football is a sport with mass participation and community interest but with a project like this it is important to scrutinise what has been announced and receive assurances on what community benefit will be derived by it and that savers monies are being properly used for a clear and guaranteed return,” said Keith Azopardi, the Leader of the Opposition.
“We can all agree that football may need a new stadium but this announcement has raised eyebrows and questions that need answering and it is the duty of the Opposition to seek answers to these questions.”
The GSD said the Government was “in a public finances crisis” and that many in Gibraltar were enduring the impact of the cost-of-living crisis.
“At a time like this with a major hole in Government finances why should savings bank monies be dedicated to this scheme when there could be better projects for which monies should be directed?” the GSD asked.
“How does an 8000-seater football stadium project fall within the Government’s National Economic Plan the objectives of which were to secure ‘economic growth’?”
“With a couple of hundred spectators for most league games and a couple of thousand even for World Cup games, is an 8000-seater stadium excessive?”
“Could the objective have been achieved with a smaller stadium?”
The GSD sought details of the cost of the project and the extent and structure of the Gibraltar Savings Bank’s involvement.
And it raised questions too about the involvement of “a relatively unknown and opaque new company” called Community Services and Supplies Ltd, which the GFA on Saturday said would be involved in the project.
“This is the company applying for the Coaling Island project in respect of which the Government weirdly stated they were not directly involved when it is clear they are the hand behind the project,” the GSD said.
CSSL also recently applied to construct a residential building at the site of the Laguna Youth Club as well as being the entity behind the planning application for the Eastern Beach promenade.
It is also involved in the Rooke site as well as in the proposed Devil’s Tower hostel project.
“Transparency is needed as to who is involved and why, who is building the stadium project and at what cost and who is benefiting commercially from the proposed project if any third party is,” the GSD said.
“The Government sold the land and stadium to GFA.”
“Why is it now, in effect, using public monies to pick up the tab for a project that Gibraltar was told would be paid for by UEFA?”
“Additionally, the price of the 2016 sale is now questionable if commercial and residential use will be allowed.”
“Commercial and residential development will generate profits that could not have been factored in when the Government sold the land for £16.5m.”
“Was it value for money and who will benefit from the scheme which is now being paid from savers money?”
“This is not a Government that has a good track record of completion of its glossy announcements set out in their electoral manifestos.”
“We’ve seen that with the Island Games projects, National Theatre, the housing developments at Hassans Centenary Terraces, Bob Peliza Mews and Chatham Views or economic developments such as the Victoria Keys or Bluewater projects.”
“Some of these don’t happen at all or if they do happen are years delayed.”
“The Island Games facilities have only been finished this year, three years after the Island Games themselves.”
“If this happens again our footballers will regrettably be playing their international home games in Portugal for a long time.”
Together Gibraltar also questioned the funding of the project by the Gibraltar Savings Bank.
TG said this meant previous statements the stadium would come “at no cost at all to the taxpayer” are now untrue.
The party also recalled earlier Government commitments in 2017 that the new facility would come “at no cost at all to the taxpayer”, and would be paid by the Gibraltar Football Association.
It had been announced the GFA “would also invest further UEFA/FIFA funding “in the region of £15m in the redevelopment of the (new) Victoria Stadium and the old Sports Hall,” TG said.
New plans announced last weekend, will now see the project funded by the Gibraltar Saving Bank, which TG pointed out is not a commercial bank, and that (as per GSB ACT 2019) “the repayment of all moneys deposited in the Savings Bank together with the interest thereon is guaranteed by the Government.”
“As the general public know full well, by ‘Government’ the Act refers to the Gibraltarian taxpayer, and by funding “sponsored’ by the Gibraltar Savings Bank it refers to funding ‘sponsored’ by the Gibraltar taxpayer,” TG said.
“The statement from Government that this development would be funded by the GFA, and its assurances that at it would come at ‘no cost to the taxpayer’ has therefore proven to be untrue.”
“If the deal happens to be a commercial failure, the bill will be footed by the taxpayer.”