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The shareholders of FBME Bank have resorted to the Arbitral Tribunal of the International Chamber of Commerce (ICC) in Paris over the Central Bank of Cyprus decision to take control and try to sell the bank’s Cyprus branch, which the owners regard as a hostile and illegal takeover.
The Central Bank took over and effectively shut down the branch a few days after the US Department of the Treasury’s FinCEN bureau alleged on July 15 that FBME Bank, whose parent is based in Tanzania, was involved in money laundering and financing of terrorist organisations, such as Hezbollah. FBME Bank was given until September 22 to respond to the FinCEN allegations, which it duly did, the shareholders said in an announcement, adding that “FinCEN is studying FBME’s response and is expected to issue final decisions.”
The arbitration, final documents for which were filed on October 29, invokes the Agreement on the reciprocal promotion and protection of investments between the Lebanese Republic and the Cyprus Republic of 5 June 2002 (law number 399). Article 6 of this Agreement prohibits any nationalisation or expropriation of the assets of the citizens of either country, while article 12 provides for the ICC arbitration, among other remedies.
The main shareholders of FBME Bank in Tanzania is Beirut-based Federal Bank of Lebanon, a family-owned bank with a 60-year history. They also own IMSP, the only alternative credit card and clearing house with a 4% market share in Cyprus, that was suspended after international banks halted payment facilities, based on the Central Bank of Cyprus actions. The island has now reverted to a monopoly once again as the only credit card company now is owned by a consortium of local banks, leaving questions about the ability of the Competitions Commissioner to review the situation.