6 April 2016

The Special Administrator of FBME Bank Limited Cyprus Branch has issued letters of termination to 136 employees supposedly to cut costs to safeguard deposits. The reason is, ostensibly, cost savings in order to protect depositors. Currently the Bank has capital and reserves of 162 million dollars over and above the funds available to cover all deposits and any cost saving would be deducted first from this. Accordingly, this purported cost saving has no benefit to depositors. Indeed, to the contrary, the ability of the bank to conserve its assets is adversely impacted because of the loss of staff.

This action is arbitrary and has been taken contrary to law; the Special Administrator is not the employer of staff at FBME Bank Limited and he does not have the power to terminate employment contracts. This illegality is compounded by a refusal to pay the staff their lawful dues. Nonetheless, the effective exclusion of staff leaves the Cyprus branch with a remaining skeleton staff that is so severely reduced that not only is the Cyprus branch incapable of normal operation, but it is so severely understaffed that it is no longer possible to implement the unlawful liquidation currently sought by the Central Bank of Cyprus (“CBC”).

Separately the Special Administrator seeks to write to all depositors asking them to confirm their current deposits at the Cyprus Branch of FBME Bank Limited. Since the branch license was revoked by the CBC banking operations have ceased and as a consequence balance information in the systems cannot lawfully be updated and statements have not been issued. Effectively, the proposed plan involved knowingly providing inaccurate information to depositors and asking them to confirm the same as accurate. If implemented this will constitute a fraud on depositors.

These actions by the CBC are a transparent attempt to achieve by illegal means the ends that they have been unable to achieve in the courts. The motivation is to prevent FBME Bank Limited asserting its legal rights in the United States and in Cyprus. This action is as misguided as it is unlawful; it will create a massive liability for the CBC to depositors of FBME Bank Limited worldwide and it increases the liability of the Republic of Cyprus to the owners of FBME Bank Limited. Ultimately it will be bank depositors, staff and taxpayers that end up suffering thanks to CBC’s continuing inability to follow the law or good sense.