Almost half a year after the Central Bank of Cyprus activated the deposit guarantee scheme for depositors of FBME Bank, most customers seem still reluctant to claim even their insured deposits. Until last week, the total number that applied to get back their deposits was 798 out of a total of 6.500 depositors. The total compensation paid to FBME customers so far was 29 million Euro out of an estimated 1.4 billion Euro in overall deposits.
An advice given to the FBME customers by the shareholders may explain their reluctance in claiming their funds. The shareholders’ website FBME Ltd. warned depositors in May that by filling and submitting a “statement of particulars” with which beneficiaries declare their personal and bank account data and give their consent for the purposes of the deposit guarantee scheme, they are waiving their claims exceeding the amount of insured deposits.
The shareholders’ claims prompted an immediate reaction by the CBC which flatly rejected their claims. It said the procedure was the one envisaged by European legislation, and added that depositors maintained their legal right to claim any amount in excess of 100.000 Euro as provided by national law.“If completed and returned this communication will wipe out all rights to holdings above the maximum level of the CBC’s guarantee scheme of 100,00 (sic) -despite the fact that FBME has ample funds to meet depositors demands,” FBME Ltd. said on their website.
The DGS is an external insurance guarantee. FBME Bank customers don’t receive their own funds, but are paid from insurance capital composed over years by other banks in Cyprus who participate in the DGS and pay their periodic premiums to the fund.
Rejections and pending claims
From the 798 claims that were submitted a substantial part is paid. Depositors received thus far 29 million Euro. However, not all claimants have received their payment. A rejection is possible. Often this is the result of fraud, administrative mistakes, the ESA 2010 statistical classification on the account, the bank that didn’t pay its premiums for the sector, or the industry the claimant operates in is excluded from the DGS.
The management committee of the DGS randomly handpicks specific claims to scrutinize them. This is a customary way to build a case that can be used later in court. The central bank among other things, has to present evidence of a working DGS to be able to request the judge in court to approve the liquidation and appoint an external liquidator.
A serious percentage of the claims is still awaiting the verdict of the management committee. It is expected that once the first group gets approved, second groups of claimants get faster processing.
Procedure to file a claim at the Cyprus DGS
Claimants, known in the records of FBME Bank, must come to Cyprus in person. They must have a bank account opened and activated in the EEA, prior to visiting Cyprus. This European Economic Area is the area in which the Agreement on the EEA provides for the free movement of persons, goods, services and capital within the European Single Market. Since the DGS in Cyprus has its basis in EU directive 2014/49/EU, the European Single Market is applicable to receive the insurance payment.
Once in Cyprus, the claimant has to visit FBME headquarters, located at 90 Archbishop Makarios III Avenue, 1077 Nicosia. At the premises of the bank the identity of the claimant, the company documents (if applicable) and the second bank account in the EEA is verified. Upon approval, the claimant receives a signed DGS checklist that must be presented afterwards to the Central Bank of Cyprus.
After the visit to FBME Bank, the official claim must be filed at the central bank, as administrator of the DGS. The central bank of Cyprus is located at 80 Kennedy Avenue, 1076 Nicosia, a 5 to 10 minute walk from FBME Bank. At the central bank, the claimant receives a ‘receipt of statement of particulars for payout regarding FBME Bank Ltd. – Cyprus branch’. The customer copy has a reference number, date, stamp and signature of the receiving official. On average it takes between 2 and 4 weeks before the DGS pays out the funds on the account.
Do you need further assistance to file your claim, do you have more than 100.000 Euro on your account or do you need a stress free, no cure no pay, recovery system, then contact us today for a free consult.