Is Unequal Treatment Illegal?

10 September 2014

The Central Bank of Cyprus’ Administrator has issued a further statement – click here – reaffirming his decision that some customers of the Cyprus branch of FBME Bank will continue to be able to have access to their money in quantities of up to EUR 10,000 a day. There is nothing new in this but it was good to have it reaffirmed.

But we would challenge his assertion that this is running “smoothly”. It isn’t for those who do not have an account at the Bank of Cyprus – the only bank with which he has authorised payments to be transacted. Also, we ask, what is the justification for freezing so many accounts? Those account holders certainly do not feel that anything has been smooth so far.

There needs to be equality of treatment across the customer base of the Bank, or at least some sort of explanation. The article by the Fitch Ratings Agency made serious mention of the danger of unequal treatment, and the Administrator is clearly acting against depositors of the same class on what is an arbitrary and discriminatory basis. These actions are not only unfair, we are advised, but are illegal.

Meanwhile, customer complaints continue to flood in to the Administrator and his paymasters at the Central Bank, and we have to ask the question ‘what are they doing about it?’ This further damages the credibility of both FBME and the Central Bank of Cyprus. Is there a deliberate strategy to create a loss of confidence in the Bank and has this been the secret rationale from the outset?

FBME Limited, the Bank’s holding company, continues to ask why the Cyprus branch regulator does not coordinate with the Statutory Manager of the Bank’s head office to bring the institution back to the orderly management of its senior directors.