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FBME will seek ways to stop sale of Cyprus branch

The holding company of FBME Bank said it will seek other ways to stop the sale of its branch in Cyprus after a Supreme Court decision cleared the way by rejecting a request to issue an interim order.

The Supreme Court on Friday rejected a request for an order suspending procedures to sell the lender that were initiated by the Central Bank (CBC) after a US Treasury report named it a “primary money laundering concern.”

FBME sought to suspend the July 21 order that placed it under resolution with the purpose of selling its operations to protect depositors.

The holding company said it regretted the Supreme Court decision but added that it “will explore other avenues to challenge this sale which it describes as a hostile takeover.”

The Tanzania-based company said it opposed the sale of the Cyprus branch, which it described as a “hasty and ill-conceived response” to the US Treasury’s FinCEN report issued on July 17.

“Such a sale does nothing to protect the Bank’s depositors or dampen risks of contagion, as claimed.”

FBME said it was working with legal counsel and forensic accountants in the US to conduct a comprehensive review of its anti-money laundering programme.

“Any attempt by the Cypriot authorities to sell the branch appears to be a move to prevent this investigation from being completed,” it said.

The review is required to address issues raised in the FinCEN announcement.

FinCEN accused FBME, which though chartered in Tanzania operates primarily in Cyprus, of facilitating financial activity for transnational organised crime and Hezbollah, an Islamist militant group considered a terrorist organisation by the US and the EU.

FBME Limited also added that it was disappointed that, after three weeks in position, the special administrator has still not taken action to dispel the damaging misrepresentation that FBME has no correspondent banking relationships.

“It does have correspondent banks.”

In a statement issued on Friday, the CBC, which is acting as the resolution authority, sought to clarify that its actions were not based on FinCEN’s announcement, but on the “immediate and drastic effects” it had on the branch’s capability to execute client transactions as a result of the measures put in place by other lenders that FBME worked with.

“As a result of FinCEN’s action, correspondent banks have frozen and or closed the branch’s US dollar accounts and have suspended transfers on behalf of the branch,” the CBC said.

The resolution authority judged that selling the branch’s operations to another bank was the appropriate measure to protect depositors and prevent contagion.


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