Over the weekend FBME bank have issued the statements and updates detailed below. You can find the original posting at their blog site: http://www.fbmeltd.com/easyconsole.cfm?id=1
Court Defers FBME Sale Decision
22 August 2014
Hearings on FBME objections to a possible sale of its Cyprus branch, due for 22 August, have been deferred by the Cyprus Supreme Court to 15 September. The Court instructed the Central Bank of Cyprus to ensure that no move on this matter is made in the meantime.
In effect, the deferment has the effect of providing more time for the completion of the investigation being carried out by forensic accountants.
BoT [Bank of Tanzania] Reaffirms Rights in FBME Case
23 August 2014
FBME Bank Limited’s home regulator, the Bank of Tanzania, has reaffirmed its rights in the supervision and regulation of FBME Bank, its operations, branches and subsidiaries. The Tanzanian Central Bank has appointed a Statutory Manager whose role includes the sanctioning and approving of all transactions and actions related to Bank.
The Statutory Manager has also reaffirmed his ruling that no instructions should be acted upon about FBME Bank without his consent.
Fitch Queries Branch Resolution Measures
23 August 2014
One of the world’s big three credit ratings agencies, Fitch Ratings, issued a report on 19 August 2014 questioning the ability of host supervisors, such as the Central Bank of Cyprus, to resolve problems of associated with the branches of foreign banks. Fitch quoted the example of FBME’s Cyprus branch in this regard. The agency also suggested that such independent action can hamper the orderly management of a difficult situation, which FBME’s shareholders wrote is exactly what the bank is currently experiencing.
In a reply sent to Fitch, FBME Limited spelt out the problems where the Central Bank of Cyprus, in taking measures without the cooperation and agreement of the Home Supervisor Bank of Tanzania, caused actions that will be potentially damaging. They explained that it wasn’t until a month after the special resolution was invoked in the case of FBME’s Cyprus Branch that contact between Host and Home Supervisor took place – and only then at the prompting of the Bank of Tanzania and after several failed efforts. “Such absence of cooperation is an abuse of supervisory standards and merely increases the risk of a disorderly process,” they wrote.
The views of Fitch Ratings are likely to have caused more international disquiet over the application of special resolution measures in Cyprus.
Complaints Flood in to Special Administrator
22 August 2014
The continued barring of transactions at the Cyprus branch of FBME Bank has attracted over 1,000 written and verbal complaints to the Central Bank of Cyprus’ Special Administrator. What started as a trickle, turned into a flood and has now become a tsunami. Suggestions have been made that the Administrator may have exceeded his powers under the Special Resolution Decree since his appointment on 21 July. He is also said to have become the focus for proposed court action by complainants.
On appointment the Special Administrator said his aim was to protect depositors. One month on, it is difficult to see a single thing that has been done has achieved this aim!
The problem is not just action – or inaction in the case of granting approvals – but also the very damaging refusal to engage in any meaningful form of communication. This is helping no one – not the depositors, not customers, not correspondents, not FBME staff, and certainly not the image of the Republic of Cyprus. How long can the authorities allow this to continue? It is hard to see how this is helping the Central Bank of Cyprus either.
Surely the time has come when wiser heads prevail and those concerned work on a viable solution.