18 May 2015
Dinos Christofides, the accountant appointed to run FBME Bank’s Cyprus branch by the Central Bank of Cyprus (CBC), abruptly left his role on Friday, 15 May 2015. The CBC announced on its website that Mr Christofides has resigned for personal reasons, though in private conversations he gave a different perspective.
Senior FBME managers were told that the second Administrator appointed by the CBC, Andrew Andronikou, will take over. Mr Andronikou is a British ‘turn-round and recovery agent’ of Cypriot origin. He has no experience of banking.
So it seems to be a good opportunity for CBC and its Administrator to seek expert help from FBME’s senior management and Board of Directors to improve the running of the branch for “both depositors and other stakeholders”. After all, FBME’s branch in Cyprus has had a 33-year history in the Republic, during which it has been one of the strongest branches in the local banking market prior to being made subject to Resolution measures. If the CBC is serious about reducing harm and in stopping the run-away train of future compensation payouts at cost to taxpayers, now is the time.
The CBC and the new Administrator should pick up on the suggestion of FBME management in letters written to Dinos Christofides on 2 and 13 March 2015. This correspondence was very respectful though it did refer to Mr Christofides’ lack of a published strategy and the almost total absence of communications between him and management on the bigger plan for the branch. The 2 March letter covered their offer to help in meeting the vital interests of depositors. When no reply was forthcoming, a second letter was sent 11 days later offering management’s assistance as a “catalyst in identifying a constructive role forward”, adding, “We trust you share our objective, namely the preservation of depositors’ interests, financial stability and the optimum outcome for the Bank and its Branch”.
A reply from Mr Christofides eventually emerged on 15 April 2015, in which he “rejected the allegations raised in your letter in their entirety”, while refusing further comment as the matter was before the courts. As far as he was concerned, this closed doors to cooperation.
Another letter, this time from management in FBME’s Internal Audit, Risk, Compliance and Information Security functions, sent on 16 March, went directly to CBC saying they were being prevented from discharging their duties by a lack of involvement in strategic decisions. To this, the response was different. They were summoned to the Administrator’s office and threatened with termination because they had not gone through the Administrator himself. No concession was made, either then or subsequently, to their requests – which have not been acted upon – or to the risks they faced in not being able to meet the highly important responsibilities required of them.
If only he had thought of working with rather than always against FBME management!
Most FBME managers in Cyprus and the owners sit in the same building as the new Administrator, while senior officials of the Central Bank are based just a few hundred metres away in CBC’s fine building.
Surely, it is not beyond the compass of mortals to arrange a proper sit-down!