It has been a turbulent year and a half for the 6.500 account holders of FBME Bank in Cyprus. During summer 2014, the bank was put under external management of the central bank. Until December 2015 no real progression has been made. The 21st of December however the branch license of FBME Cyprus was revoked. From that moment on the bank was not allowed anymore to engage in any form of transaction on behalf of its customers or the bank itself.
In April 2016 the central bank activated the Deposit Guarantee Scheme. This insurance guarantee is based on the EU directive 2014/49/EU and covers bank deposits up to 100.000 Euro. The deposit guarantee is an external insurance that covers bank deposits in Cyprus. All banks in Cyprus are obligated to participate in this insurance guarantee and pay a premium based on the deposits they hold on behalf of their customers. Furthermore the premium is based on a risk based pricing model where high risk banks pay a higher premium than low risk banks. If during a year no bank failure took place, the premiums are added to the reserve of the scheme in order to create maximum security.
Since the Deposit Guarantee Scheme is an external guarantee and premiums are paid to create the financial coverage, a payment to depositors will not have a negative impact on the liquidity of the bank nor create a liability from the bank towards the Deposit Guarantee Scheme.
Important clarification about the Cyprus Deposit Guarantee Scheme and
the role of the central bank
There are rumours that the central bank of Cyprus plans to confiscate funds on FBME accounts that exceed the level of 100.000 Euro. There are no pointers or leads towards this scenario. It seems to be part of the strategy of one of the stakeholders in an effort to discredit the central bank once again.
- FBME Bank customers cannot claim more than 100.000 Euro from the fund.
- FBME Bank customers cannot claim this 100.000 Euro twice (once from the deposit guarantee fund and once from the liquidation of the bank).
- The central bank of Cyprus took over control of FBME Bank in 2014 as one of their responsibilities to protect customer deposits and prevent a bank run. Part of this resolution is that the central bank is in control of FBME and can act as management of the bank without having to ask for any approval of any stakeholder. The statement of particulars that needs to be completed to receive payout from the DGS therefore does not violate any law.
To conclude; FBME customers with funds that exceed the 100.000 Euro level will not receive the surplus from the central bank. The regular liquidation of FBME Bank has to be agreed upon by court. The judge appoints a liquidator and then the processes to payout the depositors that have more than 100.000 Euro can start. Since there is short term liquidity, long term liquidity and blocked assets, payout will happen in tranches.
FBME Cyprus customers receive up to 100.000 Euro from Deposit Guarantee Scheme
Since the 18th of April 2016 the central bank of Cyprus opened the Deposit Guarantee Scheme for customers of the Cyprus branch of FBME. Additional information and a frequently asked questions section can be found on the website of the central bank.
The fund recovery procedure
The fund recovery procedure is straightforward and has no possibility for others than the beneficiary of the FBME account to receive any compensation.
The beneficiary of the account has to visit the central bank of Cyprus to identify himself. Compensation can only be paid out to the account of the exact beneficiary of the FBME account and this account must be in the European Union. The beneficiary has to complete the statement of particulars which will be presented by the central bank and needs to take his original company documents with him.
Once the procedure is completed, the beneficiary will receive within 7 to 20 days an email from the central bank stating the amount that will be compensated.
The risk of rejection
Not all customers of FBME Bank are eligible for compensation via the Deposit Guarantee Scheme. Since Legal Floris LLC charges a partial recovery fee on successful completion of your claim(s), we will help our clients when their application gets rejected due to administrative failure by FBME Bank or a misunderstanding of the ESA 2010 statistical classifications that can determine if you are allowed to receive compensation. Please note that we only offer this service as a package deal. We cannot fix things afterwards and assist when you already have been rejected while we were not involved in the filing of your claim. The central bank simply does not allow such an external intervention after the claim is made.
How we can help!
Since the very first beginning we guide FBME customers through the process of recovery. We help them to comply to all the requirements of the central bank in order to receive their compensation. This sometimes even includes the opening of a bank account in Cyprus to be able to receive the compensation.
We try to work as much as possible on the basis of no cure no pay and therefore those who qualify can pay our fees after the successful recovery of funds from the DGS.
If there is more than 100.000 Euro on the account we won’t stop but have a different legal strategy in place in order to help you recover the rest of your funds. We are confident, based on the parameters available, that a recovery percentage of 75 – 100% can be achieved for account holders with accounts that exceed 100.000 Euro.
For more information we suggest you to read this article or complete the contact form below this page in order to get a free consult and action plan for full recovery.