The Federal Bank of the Middle East (FBME) on Monday hit back at a statement issued by the Central Bank of Cyprus (CBC) on Friday, denying reports of mishandling in placing FBME under administration and resolution that could cost the taxpayer millions in damages sought by the lender’s owners.
FBME a statement on Monday rebutting the Central Bank of Cyprus point by point. Operations of the Tanzania-based bank’s local branch were taken over by the CBC last year after it was named a “financial institution of primary money-laundering concern” by the US Department of the Treasury (FinCEN)..
FBME said the legal framework under which the Cyprus branch was placed under resolution was the subject of legal challenge before the courts of Cyprus and further proceedings had been set in motion both in and outside of the Republic.
“FBME maintains that its own very clear position throughout has been, and remains, that there was no legal basis for the decision to put the branch into resolution,” Monday’s statement said.
“Financial stability and public interest has not been served by the acts and omissions of the Resolution Authority who have now exposed the Republic of Cyprus.”
In response to the CBC’s comment that it had taken initiatives and continues to exert efforts in cooperating with all stakeholders so as to reach an optimum solution, FBME said it was completely unaware of any initiatives or even signals from the Resolution Authority to find any compromise to the current situation and damage being inflicted upon FBME, the Bank, its vendors and its depositors.
“FBME do note, though, the admission once again that the Resolution Authority has not, even after one year, identified the ‘optimum solution,” said the bank.
“FBME has continually asserted that the resolution process and sale of the operations of the Branch was not achievable and even if it were it would not have achieved the best outcome for all parties and more importantly it would not have addressed the underlying issue facing the Bank and the Cyprus banking sector i.e. the FinCEN allegations which related to not only the Bank but also the Cyprus banking sector and the CBC itself.”
In reference to the CBC’s remark that despite repeated attempts, there had been no desire for cooperation either from the bank in question, or from persons connected to it, or from the Tanzanian supervisory authority, FBME said it was “astonished!.
It was FBME, the bank and management that had made repeated attempts, both directly and through legal counsel, to engage with the Resolution Authority.
“Every attempt has been met with a flat refusal to engage or, in almost every case, complete silence,” the bank’s statement said.
Calls and letters throughout the last year to the Governor and CBC Board had been completely ignored and three letters from the senior managers of the Bank to the CBC-appointed Special Administrator, copied to the CBC, had not been responded to in any meaningful way.
“No meaningful communication has ever been received by FBME or the Bank from the Resolution Authority since that of the announcement of the resolution measure for the sale of the operations of the Branch almost one year ago,” the bank said.
FBME said despite the CBC comments, it remained open to engaging with the central bank to achieve the best possible outcome for all parties concerned.