Desperate and Illegal Throw by Central Bank of Cyprus

6 November 2015

Sources opposed to the actions taken by a small group of Central Bank of Cyprus (CBC) officials against FBME Bank Limited, have warned that the CBC is planning to attempt a liquidation of the Cyprus branch of FBME, following the announcement by FBME of its decision to migrate certain accounts from its branch in Cyprus to its head office in Tanzania. The aim is to get the CBC out of its self-imposed dangerous predicament. If implemented, this hazardous and illegal measure will be opposed with the full force of the law.

Liquidation requires the branch to be insolvent, which is far from the case with the highly solvent and liquid FBME Bank in Cyprus, as is well-known to all including the CBC.

FBME Limited also reiterates its determination to ensure that all deposits held at the Cyprus branch will be safely guarded against CBC’s continued administrative mishandling. This ruse by the CBC comes at a time when FBME has proposed the migration of the accounts of any depositor who agrees from the Cyprus branch to the Bank’s Tanzanian head office, as a way of opening access to depositors to their money.

A letter to FBME Bank dated 30 October and signed by the CBC Governor, Chrystalla Georghadji, instructs the Bank of Tanzania (BOT) and FBME Bank to have correspondent banks release funds to the CBC. BOT and FBME Bank’s head office oppose this move due to suspicions of the motives of the CBC based on its serious mishandling of the affairs of FBME Bank during the past 15 months.

The letter makes reference to a claimed written Agreement reached between BOT and CBC on 11 August 2015, a copy of which has been requested from CBC by FBME Bank, but which has not been delivered to-date. There is no evidence that such an Agreement exists. Furthermore, the letter from CBC adds a ridiculous 5 November deadline, giving additional evidence of the desperate nature of the CBC’s scheming, which is designed to camouflage the illegal and unjustified act of liquidation.

The official involved in this dramatic misstep is a person who reports to the Governor and Executive Director of the CBC, both of whom do not have banking experience. Furthermore the remaining members of the Board of Directors of CBC (four remaining from the eight appointed at the outset) are also the members of the Board of the Resolution Authority, and also have no experience in banking. All of these people are being led by advice from the much exposed Michalis Stylianou, who heads the one-man Resolution Unit and who certainly should know better.