Cyprus Mail

FBME takes legal steps to challenge redundancies ordered by CBC administrator

FBME HQ in Nicosia

FBME Bank said late Saturday it would be fighting “the latest move” move by the Central Bank of Cyprus (CBC) and its administrator “to secure the destruction of the branch” by making the bulk of its employee base redundant”.

Chris Iacovides, the Special Administrator of the Cyprus branch of FBME who was appointed by CBC in January, on March 31 delivered signed redundancy notices to 140 of FBME staff in Cyprus, covering the major part of the remaining employee base of the bank on the island, FBME said in a statement.

The move followed a ruling on March 25, by FinCEN, a unit of the US treasury, reaffirming its decision to prohibit US banks from opening or maintaining correspondent accounts of or on behalf of FBME, which it described as a financial institution “of primary money laundering concern”.

“This latest move by the CBC and its administrator in making the bulk of its employee base redundant seeks to achieve the same destruction of the branch without gaining legal sanction. It will be vigorously opposed in the courts by FBME Bank,” the statement from the bank said.

It said that on December 22, the CBC “applied in secret” to the Cyprus judiciary to liquidate the branch “alleging that they are insolvent and illiquid” but failed to keep the matter quiet because of the intervention in court of FBME.

“Rendering the majority of the staff of the branch redundant is a further attempt by the CBC to prevent the branch from properly discharging its duties to its long standing client base.” FBME said. “Hitherto, these clients have been served by the branch in a transparent and professional manner in accordance with recognised banking principles and practices.”

The bank accused the CBC and the administrator of “pursuing a policy of intimidation and threats by causing intentional delays and unnecessary distress to Bank staff.”

On Friday a source close to the situation told the Cyprus Business Mail that since the bank’s licence had been revoked, and the final ruling had been issued by FinCEN, “expenses have to be reduced to a minimum”.

Of a total 161 staff members, “around 30 will continue working for the bank provided they want to”, in order to keep “the status quo unchanged” in anticipation of the court’s ruling on the central bank’s application to liquidate the bank and appoint a “criminal liquidator,” the source added.

“It is unlikely, following FinCEN’s decision, that the bank will operate again and resume its operations as its situation is irreversible,” the source said

The central bank appointed the administrator to FBME in July 2014.

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