Stadium project puts GSB deposits to work in ‘secure and lucrative’ deal for Gibraltar, Govt insists
The Gibraltar Government insisted on Monday that the Gibraltar Savings Bank’s £100m investment in the Gibraltar National Stadium was “100% safe for depositors” and would generate economic activity while creating an asset of value to the community as whole.
No.6 Convent Place said that the bank had generated reserves of £55m since 2011 and that this latest project would ensure depositors’ money was put to work in a “secure and lucrative” scheme that would bring wide benefits to Gibraltar.
It rejected claims the taxpayer was funding the stadium and said that without generating returns through investment of GSB funds, the payment of interest to depositors would have to come from the public purse as it did in the past.
No.6 was responding after both the GSD and Together Gibraltar raised questions about the bank’s involvement in the scheme and its scale.
On Monday the Government confirmed the GSB would invest “in the region of” £100m through the acquisition of loan notes from the GFA at an interest rate that would deliver “a small but meaningful profit” for the bank.
That led to a battery of questions from the GSD and TG over why the bank was involved when the GFA had stated it years ago that the stadium would be wholly funded by UEFA.
The opposition parties also questioned whether the money could be better targeted at a time when Gibraltar’s public finances were under intense pressure and many were struggling in the cost-of-living crisis.
In a five-page statement, No.6 Convent Place said funds from UEFA and FIFA would continue to pay “for aspects” of the stadium, adding the GFA’s initial purchase of the Victoria Stadium had been completed with UEFA funds for £16.5m.
No.6 said additional sums for the stadium “would always come from further injections of capital” from UEFA and FIFA to the GFA, and from income the GFA would generate.
“Both of these sources of income would be used to run the operations of the GFA and service the borrowing it would always have needed to seek for the development of the stadium,” No.6 said.
“The GFA will therefore continue to receive funds from various UEFA / FIFA programmes which it will use towards aspects running the GFA and of the financing to be provided by the Savings Bank by way of investment.”
“This will be in addition to the rental and capital income that the project will be the principle generation of funding for the GFA in the ancillary facilities being developed and that in effect permit the financing of this exciting opportunity.”
‘NOT TAXPAYER MONEY’
The GSB investment would come from money depositors had placed in the Savings Bank and “this is not taxpayers’ money”, the Government said.
The development of the stadium with the GSB investment would be with UEFA funds and at no cost to the taxpayer, it said.
No.6 also set out what it believed the benefit would be for the community, starting with the development of a stadium for the GFA.
The stadium project envisages a hotel and residential elements which the government said would assist the GFA in funding it and would generate economic activity.
“The project will therefore create jobs and bring economic growth through the addition of these commercial elements to the scheme, as well as the sporting facilities required to take Gibraltar football to the next level and allow the GFA to play its home games in Gibraltar as soon as possible,” No.6 said.
It said the bank would have “a first-class asset” as a security for its investment – namely Gibraltar land and property – until the financing was repaid by the GFA.
“The GSB’s capital is secure and, in fact, the returns on its investment will be more secure when related to Gibraltar property than they are in respect of any other asset class in which the bank invests depositors’ money,” No.6 said.
“In fact, there is no risk at all to depositors as a result of this investment.”
To back its analysis, No.6 looked at the past and said that when the GSD was last in office, the Savings Bank had reserves of just £1,000.
Since 2011, those reserves had grown to £55m, representing “a great assurance” to depositors which, the Government said, they did not have under the GSD.
No.6 said the GSD previously paid pensioner debenture interest from taxpayers’ money at a cost to the taxpayer of over £9m a year.
“This would be even greater given the increased deposit base of pensioners in the Savings Bank and would literally amount to throwing taxpayers’ money away, which is what the GSD is advocating for,” it said.
“The GSD will, therefore, no doubt not want to make the same mistake again of coming out all guns blazing against a Savings Bank investment which then turns out to be as safe and as positive as the GSLP Liberals predicted.”
The Government said that under the stewardship of Sir Joe Bossano, the Minister for Economic Development and chairman of the bank, the GSB had been a source of wealth for Gibraltarians.
It pointed to the GSB’s investment in the Sunborn, which despite opposition “doomsday predictions” had been repaid in full at a return of around 10% when interest rates were at zero.
Additionally, Gibraltar now benefited from a five-star hotel with over 100 hotel beds and over 200 jobs for the economy, it said.
On the question of whether the money could be better targeted, the Government said it was considering investments in other projects which would be “entirely safe and secure” for depositors and would produce “steady and reliable” income as well as community benefit under the National Economic Plan.
It said investment in such projects was permitted by the Savings Bank legislation and reminded the GSD that it had voted in favour of the legislative amendment to permit such spending.
“Ironically, if the Savings Bank does not invest in projects like the GFA stadium and the Sunborn - which are both 100% secure and are lucrative - to get a return on money, it would then be the taxpayer that would once again have to lose money - as it did under the GSD administration - by subsidising and funding the interest payable to depositors in the Savings Bank at a huge and unaffordable cost each year,” No.6 said.
“So it is by not making these types of safe and secure investments, ironically enough, that the depositors would be a greater risk given the difficult state of public finances at the moment.”
The Government said questions on the scale of the stadium were for the GFA but that it supported the decision to build an 8,000-seat facility to accommodate international matches at home in the future.
The GSD has also questioned whether the £16.5m premium paid by the GFA for the Victoria Stadium represented value for money.
The Government said the sum was for land only for sporting use but that the residential and hotel aspects had been agreed to make the stadium financially viable against the backdrop of increased development and building costs, and with an eye on the wider economic benefit to Gibraltar.
“This will be achieved through a new permitted user clause that will allow the hotel and residential elements but only as a result of all profits and income received by the GFA as the owner of the facilities being applied to repay the outstanding to the Savings Bank and thereafter exclusively for the development of football in Gibraltar,” No.6 said.
“For that reason, given the continued ‘not for profit’ element of the profits and income to be derived by the GFA, the premium has not been altered despite the change in the permitted user clause.”
When it questioned the GSB investment in the project, the GSD had criticised the government for not completing other major developments it had announced.
The government dismissed this and said it had completed new schools and sporting facilities but that its program had been disrupted by the Covid-19 pandemic.
Even so, it said construction on new affordable housing projects was underway, discussions for the development of the Eastside were being completed and the proposal for a National Theatre was underway as part of a privately-funded trust set up by the Minister for Culture with the Governor as patron.
“In fact, the irony is that it was whilst Mr Azopardi was in office with the GSD that they delivered no new affordable homes, no new schools and no new sporting facilities,” No.6 said.
“Mr Azopardi should therefore not think he can get anywhere criticising the GSLP Liberals record of delivering projects for our people – especially as he has constantly, and contradictorily, criticised the fact that we spend to deliver those projects.”
No.6 also responded to TG and said all investments by the Savings Bank were guaranteed by the Government and were therefore “ultimately underwritten by the taxpayer”.
“The investment in the GFA’s stadium is no different to all the other investments held by the Savings Bank, many of them much more remote and none of which Together Gibraltar have seen fit to question,” it said.
“Together Gibraltar are therefore wrong to single out for questioning the GFA’s stadium project is creates zero risk for depositors and is lucrative in producing the income necessary for the payment of interest to depositors, which would, ironically, otherwise have to be paid from the pockets of the taxpayer.”
“Together Gibraltar have therefore failed to understand that undertaking a zero risk project such as the GFA stadium project protects the taxpayer from having to pay the interest rates due to depositors.”
PLEA FOR BACKING
Chief Minister Fabian Picardo urged the Opposition to support the project, which he said was good for football and Gibraltar.
“Sir Joe Bossano has an exemplary record of producing income for the Savings Bank, paying its depositors interests rates without fail and building up the reserves of the Savings Bank to historic and unprecedentedly high levels,” Mr Picardo said.
“Instead of losing £9m a year as the taxpayer was doing under the GSD, the Savings Bank now issues the pensioners’ debentures and takes other deposits, makes safe and secure investments and delivered a record profit and record reserves for the people of Gibraltar under the stewardship of Sir Joe Bossano.”
“Just those massive reserves which the bank has never had before will create great confidence for depositors.”
“Sir Joe therefore deserves the support of the whole community for this project that will deliver the stadium and create lasting economic activity as well as protect the taxpayer and the depositors in the Savings Bank.”
“The GSD voted in favour of a change in the law to permit projects exactly like this and I hope they will now support the GFA and this project and I call on them and on Together Gibraltar to do so.”