Workers at FBME bank and a special administrator overseeing the shuttering of the embattled lender have come to an agreement regarding the payment of salaries and other benefits, the Central Bank said on Thursday.
Special administrator Chris Iacovides, appointed by the Central Bank of Cyprus, which revoked the Tanzanian lender’s licence after US authorities describe as being “of primary money laundering concern,” dismissed 136 workers on March 31, and decided to keep 30 workers to help pay clients their deposits.
All workers went on strike, demanding the immediate payment of their thirteenth salary, holiday, notice until dismissal, and protection of pregnant employees or those in maternity leave. They also wanted the immediate payment of their bonus and loyalty schemes for 2013 and 2014.
The sides finally came to an agreement following a proposal providing for the immediate payment of the salaries and other benefits.
“The proposal in question, worth around €1.3m, has already been implemented today (Thursday),” Central Bank spokeswoman Aliki Stylianou said in a written statement.
Beyond that, he special administrator has also paid staff €2.3m, representing 75 per cent of their bonuses.
Some €3m that staff were due to receive from their provident fund was paid in October 2015, the statement said.
Regarding the payment of the Loyalty Scheme, around €12m for 165 employees, legal advice given to the administrator said it did not constitute preferential debt — having a preferential right to payment over depositors and other creditors.
The Central Bank said it was agreed that FBME staff should apply to the Labour Court and let it decide on the status of the Loyalty Scheme.
“Any court decision will be fully respected,” the Central Bank said.
The Central Bank took over the operations of FBME in 2014 after the latter was named a “financial institution of primary money-laundering concern” US authorities.
On March 25, the Financial Crime Enforcement Network of the US Treasury reaffirmed its decision to prohibit U.S. banks from opening or maintaining correspondent accounts with FBME, effectively making transactions in US dollar impossible for the bank.
The final FinCEN ruling says that information available to FinCEN “provides reason to conclude that FBME’s anti money laundering (AML) compliance efforts remain inadequate to address the risks posed by FBME, and that FBME continues to facilitate illicit financial activity”.
The Central Bank of Cyprus fined FBME €1.2m in December over the bank’s failure to comply with anti-money laundering rules.