The Supreme Court rejected on Friday a request by the Federal Bank of the Middle East (FBME) for an interim decree which would have called for the suspension of the selling of its Cyprus branch, the Central Bank announced here today.
On July 21 the Resolution Authority issued a Decree, which placed the branch of FBME Bank Ltd in Cyprus under resolution, with the purpose to sell the operations of the branch “with the aim of protecting FBME depositors”, after a US Treasury report implicated the Bank in money laundering.
But FBME appealed to the Supreme Court and the Central Bank accepted not to proceed, in its capacity as the Resolution Authority, to the signing of a contract or the issuing of a new decree for the sale of the operations of the branch of FBME in Cyprus, until the Court’s ruling.
On Friday the Central Bank said that “the Supreme Court rejected the application of FBME for an interim decree which called for the suspension of the decree for the selling of the operations of the branch”.
It noted that selling FBME`s branch in Cyprus to another credit institution was the most appropriate resolution measure to protect depositors and prevent the spread of risks that could affect the stability of Cyprus` entire banking system.
It also said that the decision to take resolution measures was not based on the report of US Treasury`s FinCEN (Financial Crimes Enforcement Network), but rather on the immediate consequences of this report on the transactions of the branch, as a result of measures taken by other banks in which the branch maintained deposit accounts.
Furthermore the Central Bank said that the Resolution Authority appointed Dinos Christofides as Special Administrator of the branch of FBME Bank in Cyprus.
