Strike of FBME employees delays DGS payouts

The latest episode in the nightmare of Tanzania based FBME Bank started last Monday, the 11th of April whenFBME Bank staff in Cyprus announced that they will be going on an indefinite strike in protest against the mass lay-off of 136 staff at the end of March by the Bank’s Special Administrator, as matters continue to escalate between the Bank and the CBC.

“Employees of FBME Bank Limited today April 11, 2016 go on strike/protest for violating our labour rights. After almost two years under the Central Bank’s management we are tired with the unacceptable and disparaging attitudes towards employees from time to time,” a statement on behalf of FBME Bank staff said.

CBC administrator for FBME Chris Iacovides, delivered signed redundancy notices to 136 FBME Bank staff members in Cyprus, covering the major part of the remaining employee base of FBME in Cyprus, citing cost cutting for this decision.

The mass lay-offs came after a recent decision by the US Treasury Department’s financial crime enforcement network – FinCEN – to support an earlier ruling prohibiting US banks from opening or maintaining correspondent accounts of or on behalf of FBME, which, FinCEN described as a primary money laundering concern.

The announcement shouldn’t have come as a surprise after US court announced in her verdict in October 2015 that it will not second guess FinCEN on its finding that FBME poses a primary money laundering concern, or its resulting imposition of the fifth special measure.

At the time of the redundancies, FBME accused the CBC and its Administrator of seeking to achieve the destruction of the branch without gaining legal sanction by making the bulk of its employee base redundant.

FBME Bank staff accused the CBC and the Special Administrator of giving the Bank’s depositors false information and terminating staff work contracts illegally, without giving the legal prior notice period or benefits due to them as stated by law.

“As a highlight a few days ago two of our colleagues were illegally and vengefully terminated in a bullying attempt because they expressed their worry and suggested mistakes that had been committed by the Special Administrator of the Cyprus Branch of FBME Bank Limited Mr. Chris Iacovides, and the Central Bank when we, the staff, were asked to submit to FBME Bank Limited depositors incorrect information in relation to their deposits,” FBME Bank staff said on Monday in their statement noting the reasons behind their strike action.

“Two days later, while we were preparing as employees to take action for unlawful termination of our colleagues, 136 out of the 165 employees received letters terminating their employment, including eight pregnant women and mothers on maternity leave. Until today,  these employees have not been given the statutory notice period before termination of employment, the proportion of annual leave, 13th salary ratio and the other accrued benefits. These benefits are protected by law…” FBME Bank staff further mentioned in their statement.

It should be noted that FBME is not signatory to any collective agreement with bank workers union ETYK. According to the FBME employees, the Special Advisor’s legal advisor, Pavlos Kourtellos, claimed that the letters of dismissal given to the workers do not constitute the termination of their services or redundancy “but cancellation of contract” and therefore, FBME workers have no claim on the amounts they demand, which is common practice in redundancy caused by actions of the employer.

Although the followed procedure is questionable, procedures as such happen often in bankruptcy and liquidation. It is however uncertain if future salary packages influence the capacity to repay customer deposits. It is a certainty that customer payouts under the Cyprus Deposit Protection Scheme will be delayed. The only sound advice to the banks’ customers is therefore to overwhelm the central bank of Cyprus and FBME Bank with requests for payout of account balances under the DPS.