March 1, 2022
On 24 February 2022 the Cyprus Court ruled that the Central Bank of Cyprus and in particular the Resolution Authority acted unlawfully by placing FBME Bank Limited, Cyprus Branch, into resolution with the stated aim of selling the business of the bank.
The Administrative Court of Cyprus handed down their judgement on the claim filed on 24 July 2014 challenging the resolution measure. In brief, the Administrative Court of Cyprus has ruled that for the past seven and a half years the Central Bank of Cyprus have been acting illegally; rendering all decisions, actions and inactions as illegal.
At the date of the purported resolution there were sufficient funds in FBME Bank Limited to pay depositors in full with a residual value to be paid to Shareholders, who stand last in line in a creditor hierarchy. The Shareholders clearly communicated the legal and commercial absurdity of the Central Bank of Cyprus position from the outset and eventually had no option left but to take legal action.
Since 2014 the Shareholders sought to protect depositors and FBME Bank Limited. The Shareholders maintained then that Central Bank of Cyprus was acting unlawfully but, nonetheless, the Shareholders consistently urged the Central Bank to cooperate with the depositors, with the home regulator, the Bank of Tanzania, and with the Shareholders to work together for a constructive and expedited outcome.
Rather than cooperate with all relevant stakeholders the Central Bank of Cyprus compounded the illegality of their actions by unlawfully appointing a series of non-independent and obviously conflicted administrators, at the depositors’ expense and, further, utilising FBME Bank Limited funds to pay for lawyers and consultants engaged for the primary purpose of finding grounds to perpetuate the status quo and to justify the Central Bank of Cyprus’ use of illegal measures.
We understand, but have yet to formally confirm, that the Central Bank of Cyprus have removed the current administrator from FBME Bank Limited on 1 March 2022.
The Shareholders urge the Central Bank of Cyprus to accept the decisions of the Cyprus courts, draw a line under the last seven and a half years of unlawful mismanagement they have orchestrated, and cooperate with all stakeholders to stop any further erosion of funds to repay all depositors.
The Shareholders propose a meeting at the offices of our lawyers this week to initiate a constructive dialogue.