Letter sent to European Central Bank

5 August 2014

Correspondence has been initiated with the European Central Bank (ECB by the shareholders of FBME Limited, the holding company of FBME Bank, setting out concerns at actions taken by the Central Bank of Cyprus and the performance of its Special Administrator since 21 July 2014. The letter was sent to the Chair of the Supervisory Board of the European Central Bank, Mrs Daniele Nouy on 5 August 2014.

It describes the Special Resolution issued at 11 pm on the night of 21 July that among other things provided for the immediate sale of assets and liabilities of the Cyprus branch of FBME Bank, which it stated was a completely disproportionate response to FinCEN’s provisional report.

Furthermore, the letter says that as a direct consequence of the precipitous action of the Cyprus Central Bank  FBME in now under administration in both Cyprus and Tanzania.

It pointed out that despite being able to make non-US dollar payments the Central Bank-appointed Special Administrator has not allowed such transactions to be made from the time of his appointment on 21 July to at least the date of the letter to the European Central Bank, 5 August 2014.

Though the closed period of the Bank’s branch passed on 28 July, the decision of the Special Administrator to declare the branch open but not able to transact business has created conditions for an eventual run on the Bank.

The question was posed why the Central Bank of Cyprus is in a rush to sell what is a healthy and liquid international bank branch in Cyprus. The letter called for the Supervisory Board of the ECB to review immediately the actions of the Central Bank of Cyprus to determine whether they conformed with the ECB’s own supervisory standards and procedures.

Reference was also made to the large degree of mistrust and the general lack of confidence in the Cyprus banking sector.