Staff of troubled Federal Bank of the Middle East (FBME) 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 FBME and the central bank.
“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.
On 31 March, the special administrator of the bank, 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. The reason given by Iacovides was lowering cost to safeguard the interest of the customer deposits.
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.
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 continued in its Monday statement.
According to the FBME employees in their statement, 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.
The strike of the bank’s employees comes at a notable moment. The central bank wants to activate the deposit guarantee scheme to repay customers of the bank their account balances up to 100.000 Euro. The stubborn attitude of the banks’ employees make it impossible for the special administrator and the central bank (as administrator of the DGS) to verify exact account balances, and therefore payout of the insured funds is further delayed.
The grounds under which the banks’ staff start their strike are interesting to say the least. The bank lost its license to operate as a branch the 21st of December 2015. None of the known court cases discuss the potential re-opening of the bank. Even worse, there are no legal grounds to reinstate a branch banking license once the central bank takes away this license.
Even in the unlikely event that judges in U.S. court and the ICC in Paris rule in favor of FBME Ltd., that still does not mean that the bank can re-open again. The technical infrastructure of the bank is long gone and international payment systems like IBAN and SWIFT cannot grant access to the troubled bank. It’s a closed book.