‘Back off’ from FBME sale, € 270 mln moved to BOC

Financial Mirror (Cyprus) - - FRONT PAGE -

The Cen­tral Bank of Cyprus and its ap­pointed ad­min­is­tra­tor have been told to back off from any at­tempt to sell FBME Bank to any other Cypriot or other lender, sug­gest­ing that the ar­bi­tra­tion process un­der­way could be pro­duc­ing re­sults and may help re­solve an is­sue that has caused Cyprus more em­bar­rass­ment than in­tended.

This fol­lows a sim­i­lar re­quest last week by the At­tor­ney Gen­eral who asked mem­bers of par­lia­ment to re­frain from de­bat­ing the is­sue, for fear of jeop­ar­dis­ing the out­come of the process cur­rently un­der­way.

On Fri­day night, the Paris-based Ar­bi­tral Tri­bunal of the In­ter­na­tional Cham­ber of Com­merce ad­vised the Repub­lic of Cyprus not to take any fur­ther ac­tion with re­gard to the sale of the Cyprus branch of FBME, or to take more funds from FBME to the Cen­tral Bank of Cyprus and to make no at­tempt to close the branch while dis­cus­sion is con­tin­u­ing with re­gard to in­terim mea­sures to pro­tect the branch.

The Fi­nan­cial Mir­ror es­ti­mates that about 270 mln eu­ros may have al­ready been re­moved from the FBME bal­ance sheet and placed by the Cen­tral Bank in es­crow with the Bank of Cyprus, widely ru­moured as the po­ten­tial buyer of the Tan­za­nia-based bank’s lo­cal branch.

In re­cent weeks, some 140-150 mln eu­ros in de­pos­i­tors’ and the share­hold­ers’ money has been re­moved, while a fur­ther 120 mln had been lifted and taken to Bank of Cyprus last Au­gust.

Adding in­sult to in­jury, although the or­der came from the Cen­tral Bank-ap­pointed ad­min­is­tra­tor, cus­tomers and de­pos­i­tors who need ac­cess to their own funds are charged a penalty, bur­den­ing them with ad­di­tional costs and un­nec­es­sary trou­ble.

“Th­ese peo­ple are just caus­ing us harm,” one fi­nan­cial ser­vices com­pany of­fi­cial in Li­mas­sol told the Fi­nan­cial Mir­ror.

“We never re­ally un­der­stood why FBME had to be placed un­der res­o­lu­tion and why they are caus­ing us all this trou­ble. Don’t they re­alise that we are giv­ing Cyprus a bad name just by telling our clients and as­so­ciates of this ridicu­lous sit­u­a­tion?” he said.

The Fi­nan­cial Mir­ror has learned that other legal at­tempts are also un­der­way that may re­sult in the bank re­sum­ing some of its ac­tiv­i­ties, but that all de­pends on the on­go­ing process at the ICC. from At­tor­ney Gen­eral Costas Clerides who said that de­tails might emerge that could harm the case of the Repub­lic and the Cen­tral Bank in the courts of Cyprus and at the ar­bi­tra­tion hear­ings in Paris. He had also de­clined to at­tend the hear­ing him­self.

In ac­cept­ing the re­quest, mem­bers of the par­lia­men­tary com­mit­tee made clear that it would be re-staged at a later date.

MP Aris­tos Dami­anou was quoted in the lo­cal press as say­ing that although the com­mit­tee did not want to hurt the in­ter­ests of the state, its de­ci­sion should in no way be taken as an in­def­i­nite post­pone­ment.

“On the con­trary,” he pointed out, “those re­spon­si­ble for han­dling the mat­ter will be called, as part of the par­lia­men­tary con­trol, to ac­count for their ac­tions, in­ac­tions or omis­sions.”

Dami­anou added that MPs do not want “… any par­lia­men­tary dis­cus­sion to cre­ate an ex­cuse for ac­tions that hap­pened in the past by whichever in­sti­tu­tion … nonethe­less we are con­cerned about the prior han­dling (of the FBME case) by lead­ing in­sti­tu­tions of the Repub­lic, which could po­ten­tially end up cost­ing the Repub­lic sev­eral mil­lions”.

Par­lia­men­tary sources told the Fi­nan­cial Mir­ror that FBME Cyprus had not been in­vited to the hear­ing. The list in­cluded the Cen­tral Bank of Cyprus, its Ad­min­is­tra­tor, the At­tor­ney Gen­eral, the head of Po­lice Fi­nan­cial Crime Squad Mokas, rep­re­sen­ta­tives from the Min­istry of Fi­nance, and the head of the Cyprus Bankers As­so­ci­a­tion.

Mean­while, in a sep­a­rate case, IMSP, the FBME-owned card ser­vices com­pany, is mon­i­tor­ing the hear­ings at the Com­pe­ti­tion Pro­tec­tion Com­mis­sion which started last week and the hear­ings are ex­pected to con­tinue well into March.

The com­pany, that claims a case of col­lu­sion by JCC Pay­ment Sys­tems, coin­ci­den­tally ma­jor­ity-owned by Bank of Cyprus, can still only ac­cess EUR 1,000 of their money a day, as their sole ac­count is in FBME Bank, and the Cen­tral Bank re­stric­tions on FBME cus­tomers are that, cur­rently, only EUR 1,000 can be taken out each work­ing day.

In an in­terim find­ing in April 2014, the Com­mis­sion found against JCC “and oth­ers” (its share­hold­ers) for mo­nop­o­lis­tic prac­tices. It has now called JCC and the other par­ties to present their de­fense against its find­ings.

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