A rollercoaster, that is how most of the mutual clients we share with much debated FBME Bank describe the last year and a half. What frustrates most is the total lack of proper information and guidance by the stakeholders. That the central bank is very brief in its responses is understandable and common in these cases, but that FBME and the large group of agents keeps on providing biased news or making vague statements is devastating. You would expect more from professional parties who operate in the financial industry.
Panic in Tanzania
Almost immediately after US based FinCEN published its Notice of Finding that accused FBME of facilitating money laundering and financial transactions for multinational organised crime organizations and Hezbollah. The Central Bank of Cyprus took over management of the bank. The result was a closure of the branch of the bank with a main office in Tanzania.
Observants with accounts in Tanzania saw thunderstorms coming and tried to wire funds out of the country overnight. Since transfers coming from Tanzania need a corresponding bank account to arrive at the designated account, these funds could be blocked by the correspondent banks. Almost half of the balance sheet was trasfered out of the country. The central bank of Tanzania had no choice and had to follow the example of the central bank of Cyprus and placed FBME Tanzania as well under resolution.
Bank check recovery service
It took a few months, where terms for banks under resolution were almost exceeded, until a temporary solution was presented. Customers of FBME Bank in Cyprus with an Euro account, were allowed to withdraw checks on a daily and later weekly basis. A bank run was prevented but the liquidity of the bank went down. It is estimated that an amount of 100 million Euro was taken out Cyprus accounts.
Checks stop coming
Early december 2015, the bank check delivery process was delayed and got some hick-ups. The unofficial story is that FBME Bank was unwilling to make another deposit to cover the bank checks. It resulted in the banks branch license being taken away by the central bank of Cyprus.
Suspension of the branch license
The 21st of December 2015 the central bank of Cyprus officially revoked the branch license of FBME Bank. The bank is not allowed anymore to engage in any transaction and is partly out of control.
FBME Ltd. is in strong opposition against the actions taken by the central bank and still refute all allegations. Their findings are published in a White Paper that is later stashed, probably on advice by their legal team.
The activation of the Deposit Guarantee Scheme
End of March 2016 was thrilling. The bail out programme that was granted by the Eurogroup, European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF), also referred to as Trojka, came to an end. There is an overlay between the end of the bailout programme for Cyprus and the closure of FBME Bank Cyprus.
It was agreed in the bail out programme that the Cyprus banking sector had to be reformed. The memorandum of Economic Adjustment Programme for Cyprus specifically mentioned (I) Recapitalisation of the entire financial sector while accepting a closure of the Laiki bank, and (II) Implementation of the anti-money laundering framework in Cypriot financial institutions.
Payout process starts
After lots of hassle and bleating, the payout process for FBME customers finally started the 15th of June. If you think all now goes completely according to plan and the directives are followed, please think again. FBME Bank acts as an administrator for the Deposit Guarantee Scheme, this is a big conflict of interest. But it also has a nice advantage for those who have more than 100.000 Euro on their account. It will be much easier to proof the administrative chaos at FBME Bank when they ask for old copies of passports, new company documents, etc. It is therefore recommended that you only hand over new documents to the bank when you have seen your file.
Liquidation and recovery above 100.000 Euro
Liquidation is a part of bankruptcy. A judge in court has to appoint an external qualified liquidator. The liquidator will examine assets and liabilities. Assets become available in tranches, therefore payouts to the banks customers and other creditors come in installments. It is expected that the liquidation of FBME Bank takes 3 to 4 years.
To get the process started, follow the link FBME Bank Cyprus and contact us for a free consult. We will guide you through the process and help you towards maximum recovery. As it looks now, payout of the deposit guarantee takes between 7 and 20 working days. It is however uncertain as to how long this will stay active.