The application to the chamber’s arbitral tribunal is based on FBME shareholders stated view that the central bank’s actions represent a “hostile takeover”.
Specifically in its website statement yesterday, FBME said the arbitration invokes the Lebanese-Cyprus convention on the reciprocal promotion and protection of investment. FBME Bank’s Lebanese connections with Cyprus date back to 1982 when it first established its Nicosia operations as a subsidiary of the Federal Bank of Lebanon in 1982.
The convention prohibits any nationalisation or expropriation of the assets of the citizens of either country, it said.
“Measures for the sale of the Cyprus branch of FBME Bank clearly come as an obvious and unjustified infringement of this convention, especially in the absence of any litigation or conviction against the Bank,”
It added that these measures were “designed for insolvent banks or those facing serious liquidity problems, not a healthy financial institution such as FBME Bank, where the financial position is sound and fully in line with capital adequacy and solvency requirements of the European Central Bank”.
The Management of Tanzania-headquartered FBME was taken over by Tanzania’s central bank last month after the Central Bank of Cyprus placed two branches under its supervision. To read more, click here.
