10 July 2015
FBME LIMITED (FBME), AS THE HOLDING COMPANY OF FBME BANK LIMITED, RESPONDS TO THE ANNOUNCEMENT BELOW OF THE CENTRAL BANK OF CYPRUS (CBC) AS RESOLUTION AUTHORITY: WE HAVE SET OUT IN SECTIONS A TRANSLATION OF THE CBC STATEMENT RELEASED ON 10 JULY 2015. FBME’S RESPONSE IS GIVEN IN ITALICS AFTER EACH SECTION.
Resolution Authority statement in connection with publications concerning the FBME Bank Ltd Cyprus branch
(10 July 2015)
Regarding recent press releases in connection with the FBME Bank Ltd Cyprus branch, which has been under resolution since July 2014, due to the adverse effects sustained by its operations as a result of FinCEN’s action of naming the bank as a primary money laundering concern, the Central Bank of Cyprus (CBoC) – in its capacity as the Resolution Authority – wishes to reiterate that all measures and actions taken in handling the situation stem from the existing national and European legal framework and aim, among others, at maintaining financial stability, safeguarding public interest and protecting depositors.
The referenced legal framework under which the Branch was placed into resolution is the subject of legal challenge before the Courts of Cyprus and further proceedings have been set in motion both in and outside of the Republic. FBME’s very clear position throughout has been, and remains, that there was no legal basis for the decision to put the Branch into resolution. 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.
Moreover, the CBoC would like to clarify that it has taken initiatives and continues to exert efforts in cooperating with all stakeholders so as to reach an optimum solution, at the soonest possible, in order to service the aforesaid purposes, always within the framework of the relevant legislation.
FBME is 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 most importantly its depositors.
FBME notes, though, the admission once again that the Resolution Authority has not, even after one year, identified the ‘optimum solution’. 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.
The CBoC regretfully notes that despite its repeated attempts, up until today there has been no desire for cooperation either from the bank in question, or from persons connected to it, or from the Tanzanian supervisory authority, which is the country of incorporation of the branch.
On the contrary, FBME, the Bank and management have 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. Calls and letters throughout the last year to the Governor and CBC Board have seemingly been completely ignored as no responses were ever given. Three letters from the senior managers of the Bank to the CBC-appointed Special Administrator, copied to the CBC, have not been responded to in any meaningful way. These management letters were also copied to other relevant government departments in order to make every effort to find a solution.
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 CBoC is faced with repeated actions that do not contribute in the right direction. Specifically, the bank and its connected persons have issued public announcements and attacks against the CBoC and its personnel, which are totally outside every banking practice and norm.
Clearly there has been no movement in the same direction as FBME states categorically that the Resolution Authority is stubbornly moving in the wrong direction – the destruction of the Bank to the detriment of all its stakeholders. That this direction taken by the CBC is wrong is self-evident by the fact that the CBC has made absolutely no progress in achieving its stated resolution measure and, logically, FBME has therefore taken every possible action to avoid the CBC selling the operations of a perfectly healthy, liquid and solvent bank which sale FBME maintains is in breach of all applicable laws.
For the purpose of protecting the interests of the Republic, the CBoC will not comment on the specific allegations that have been stated in publications in the media, as well as by the bank directly, as these are subject to judicial and international arbitration proceedings, which are in progress.
What are termed ‘allegations’ by the Resolution Authority are simply facts, fully evidenced and these can be substantiated – if necessary before the various judicial bodies in the fullness of time.
Notwithstanding all of the above, FBME remains open to engaging with the CBC to exploring in good faith for a solution that will achieve the best possible outcome for all parties concerned.