24 May 2016
The recent communication from the Central Bank of Cyprus (CBC) to account holders of the Cyprus branch of FBME Bank defies the law and all legal precedent, says FBME. The communication, called by the CBC a “statement of depositors’ particulars”, asks account holders to submit personal details and is a backdoor approach to have them apply for deposit guarantee payouts without being made aware that they are doing so.
If completed and returned this communication will wipe out all rights to holdings above the maximum level of the CBC’s guarantee scheme of EUR 100,00 -despite the fact that FBME has ample funds to meet depositors demands. Moreover, it will mean that depositors will lose their rights to bring future action against the CBC for its serious and illegal mismanagement of FBME Bank.
The key points in the CBC communication are 12, 13 and 14:
12. The person making this statement hereby assigns to the DGS all his/her/its rights, title and interest in and to the accounts he/she/it holds with FBME Bank Ltd – Cyprus Branch up to the payout amount and with effect on the moment the payout amount is paid by the DGS.
13. Without prejudice to point 12, the person making this statement hereby reserves and will not pursue any right, title or interest in and to the accounts he/she/it holds with FBME Bank Ltd – Cyprus Branch until the DGS will have recovered the payout amount from FBME Bank Ltd – Cyprus Branch. During this period, the person making this statement will transfer to the DGS, as the DGS may direct, any and all amounts that are made available to the person making this statement by a person other than the DGS in connection with the accounts that the person making this statement holds with FBME Bank Ltd – Cyprus Branch.
14. The person making this statement hereby irrevocably appoints the DGS as his/her/its attorney for the purposes of doing in that person’s name any and all acts and executing, signing and, if required, registering in that person’s name any and all documents the person making this statement himself/herself/itself could correspondingly do, execute, sign and register, in order to fully implement the above points 12 and 13.
As we confirmed a month ago, only 300 depositors have applied to the CBC for payments from its deposit guarantee scheme. This is out of 6,500 holders of accounts at FBME’s Cyprus branch. It is only possible to speculate on the motives of the 120 depositors who have done so, but it is likely that many will be customers with holdings of or less than EUR 100,000.
It is worth reminding readers that any payout from the CBC’s scheme should be made from a special and separate fund held by the central bank into which all Cyprus banks have been paying in recent years. Yet the CBC’s intention, quite clearly, is to use FBME’s customers’ own money to pay out their insurance compensation, in contravention of applicable Cyprus and EU laws.