As we all know about the history of FBME; its foundation, popularity as an international commercial bank in Cyprus, its allegation of being involved in money laundering and other terrorist financing activities and finally closure of the bank. During its inquiry customers, clients and account holders suffered many issues regarding transfer and withdrawal of their own deposited assets. Further due to the abrupt withdrawal of massive deposits by many of the account holders render bank in the stat of the bank run. It means that a condition which includes unavailability of the money to the account holders for withdrawal.
Day by day, due to the public stress on the bank for the sake of their deposits central bank of Cyprus and Tanzania take the hold of FBME of Cyprus branch. FBME Cyprus branch transferred their deposits to the main branch in Tanzania. During this transfer of asset recovery of funds was a major issue.
When a customer open account in a bank in the European Union, they offer Deposits Guarantee Scheme to the account holder. FBME Cyprus being part of European Union also followed that rule for the security of deposited money. But the transfer of account and deposits from Cyprus to Tanzania poses risks of liquidity and liability during this type of transfer as these types of transfers often cause loss of deposits. To reduce the loss FBME Tanzania head office offered deposit insurance schemes for customers.
The amount of protected deposit is TZS 1,500,000. According to an average calculation, this is around 675 Euro or 760 US dollar in total. Based on the directives published by the European Commission, the protection for deposits at FBME Bank in Cyprus is 100.000 Euro.
It is the responsibility of central bank and FBME to make sure the recovery of the assets of customers of Cyprus bank. Therefore some suggestions for customers of FBME Cyprus are given below:
- Reject the proposed solution and forbid the bank to transfer your account and assets to Tanzania.
- Demand to keep at least 100.000 Euro in Cyprus.
- Only permission to transfer accounts and assets to Tanzania when: 100.000 Euro can stay in Europe for compensation via the Deposit Guarantee Scheme.
- Strong guarantees for your principal deposit are presented.
- Individual customers get rights of voting in the bank via a corporation model.
- As suggested 20% of customers’ accounts available for immediate release.
Account holders of FBME can shift their account to the other banks or in the main branch of FBME in Tanzania with the same account number and information. They can withdraw their deposits via check from their own personal account. The withdrawal must not succeed the 1000 Euro per week up to December 2016.