Cyprus Mail
Cyprus

CBC to request FBME resolution order by Wednesday – reports

FBME HQ in Nicosia

By Angelos Anastasiou

Monday’s decision to revoke the banking licence of the Federal Bank of the Middle East (FBME) was part of the Central Bank of Cyprus’ effort to protect the lender’s depositors, both insured and uninsured, online business portal Stockwatch reported on Tuesday, citing an unnamed CBC senior official.

FBME, which boasts around 6,000 depositors, was placed under administration by the CBC in the summer of 2014, after the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) named it as a “financial institution of primary money-laundering concern”.

The decision to rescind the bank’s operating licence was made on Monday, and the bank’s management was informed by letter shortly thereafter.

In a statement on Monday, FBME said it planned to contest the revocation of its licence in court.

According to Stockwatch, a senior CBC official said that completing the procedure to wind down FBME’s operations requires the issuance of a resolution order by a court, expected to be requested by Wednesday.

But resolution of a banking institution, he explained, requires the prior suspension of operations.

With regard to the lender’s depositors, the official said the Central bank will fully apply the law, which protects insured deposits – that is, up to €100,000.

Nevertheless, he noted, the oversight body has been in constant communication with banks, locally and abroad, so that FBME’s assets globally could be ascertained, with a view to covering uninsured deposits – over €100,000.

Total deposits at the Cyprus branch of the Tanzania-based bank were €1.2 billion on the day it was taken over.

FBME had significant deposits in European and American banks, which were frozen after the FinCEN report linking it with international terrorism surfaced.

Thus, the official said, the process of compensating uninsured depositors will take time.

It is expected that, after the Christmas holidays, a liquidator will be appointed.

According to Stockwatch, American and European banks have refused to transact with FBME since July 2014 – when the FinCen report came out – and the lender was effectively frozen.

After taking over, the CBC man said, the bank’s overseas deposits were repatriated and repaid to depositors in proportion to their holdings at the bank.

But the bank’s liquidity ran out, and the CBC tried to sell its operations to cover uninsured deposits.

When no interested investors came forth, the sale effort was given up, and the CBC decided that operations are no longer feasible.

According to the unnamed official, FBME’s management had informed the CBC that the Tanzanian Central Bank had authorised it to move all its operations and deposits to Tanzania.

CBC governor personally contacted her Tanzanian counterpart, he added, who denied the claim.


Related posts

Screening for breast cancer bolstered under Gesy

Evie Andreou

Laws alone are not enough to tackle animal abuse, new environment commissioner says

Jean Christou

Foreign minister in Brussels, will meet Borrell

Kyprianou says ‘honest compromise’ the only way for Cyprus to have a future

Jean Christou

The Donald and I

Jean Christou

Syria: the most complex conflict of our time

Elias Hazou

5 comments

Comments are closed.