20 November 2014

Further to our story this morning, it is good to report that significant sums from FBME Bank accounts have arrived at the Central Bank of Cyprus. So, for now, there is no liquidity issue and transactions should be renewed. It is good to bring welcome news to our customers, staff, correspondents, associates and friends.

Let’s hope that the Central Bank of Cyprus bears this in mind when it levies charges on FBME Bank. As per ECB rules, money held with regulatory authorities should not exceed 1% of total bank deposits. Sensibly, the ECB wants bank funds to be out in the euro zone working with people and companies to help rebuild recessionary economies. Money held in central banks by individual institutions above this 1% is then subject to a fine at a current rate of 0.2%.
Clearly, the situation where FBME’s Cyprus branch funds are held by the Central Bank of Cyprus under the orders of its own Administrator should not be subject to this rule, as FBME has no say in the matter. Yet in August, September and October such fines were levied. To his credit, the Administrator, Dinos Christofides, said he would work to have these charges reversed. Hopefully, this will be done before much longer.