Court of appeal sets June 26 deadline for cross appeal by FBME, depositors

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By Stelios Orphanides

The owners of FBME Bank Ltd as well as its depositors have a June 26 deadline to challenge by cross-appeal, certain parts of proceedings at the Nicosia District Court which last month rejected the application of the Central Bank of Cyprus to appoint a liquidator, the Cyprus News Agency (CNA) reported on Monday.

The CNA citied the three-member court of appeal of the Supreme Court which reviewed the central bank’s request for a speedy process, the CNA reported.

The Central Bank of Cyprus which revoked the licence of FBME’s Cyprus branch and fined it €1.2m for failing to comply with the anti-money laundering law in December 2015, initially placed the Tanzanian lender under administration and subsequently under resolution after US authorities described the lender as a financial institution of primary money laundering concern in July 2014. In April 2016, the central bank also triggered the deposits guarantee scheme to compensate depositors with up to €100,000.

The rejection of the central bank’s request for the appointment of a liquidator by the Nicosia district court last month – on the grounds that it did not serve the public interest – came a week after the Bank of Tanzania, which supervises the mother bank revoked the licence of FBME and appointed a liquidator itself. The Tanzanian liquidator is expected to appear in a Cypriot court on June 20, to request recognition of his appointment by Cypriot authorities.

On Monday, the Paris-based arbitration court of the International Chamber of Commerce began reviewing the application of the owners of FBME against the Republic of Cyprus. The bank’s shareholders who initially demanded €500m in damages citing Cyprus’s failure to protect their investment, have increased their demands in the meantime to €1.5bn.

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Pc

    So, effectively the Supreme Court is left with a few choices:
    – not grant the request by the CBC, which leaves everything in limbo and is a disaster for the employees and FBME’s creditors.
    – grant the request by the CBC, which means things can move forward, with the caveat that there needs to be a reconciliation and cooperation with the Tanzanian liquidator,
    – deny the request eventhough the Tanzanian request gets recogised. Would that create the possibility for the Tanzanians to execute the liquidation of FBME without the Cypriot authorities having any say because there is no Cypriot counterpart?

    I also, to this day, do not understand how holding off on liquidation would be in favour of the public interest.

    • Nemisis

      The only legal and correct way forward is to recognise the Tanzanian request for recognition (as it has been by other countries) and for the CBC to get their grubby hands out of the FBME…BUT as nothing about this case has ever been legal or morally correct, and with the obvious disdain and contempt shown for all things foreign, (apart from foreign money) that’s probably a dream, how the CBC have the nerve to appeal against the District Court judgement, which was damming of them to say the least, is proof of their brazen arrogance…Which Paris will probably make all Cypriots pay dearly for.

      • Pc

        CBC has every right to have their “grubby hands” on FBME as FBME Cyprus operated under a Cypriot banking licenses and falls under the Cypriot bank guarantee scheme.

        I personally very much question the district courts’ decision in this matter as I do not see how keeping FBME out of administration serves its creditors, the remaining employees, or the public at large. It merely holds up the inevitable liquidation of the assets.

        Whether “Paris” will be a win is highly doubtful, given that pretty much all other cases have been decided against FBME so far.

      • Pjotr Schastlivy

        Is there an update from Paris? You seem to know more.