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THE Central Bank of Cyprus (CBC) on Friday denied rumours of mishandling in placing the Federal Bank of the Middle East (FBME) under administration and resolution that could cost the taxpayer millions in damages sought by the lender’s owners.

Operations of the Tanzania-based bank’s local branch were taken over by the CBC last year after it was named a “financial institution of primary money-laundering concern” by the US Department of the Treasury.

In a statement, the CBC, in its capacity as Resolution Authority, offered its oft-repeated assurance that “all measures and actions taken to address the situation are based on national and European Union law, and aim to, inter alia, safeguard financial stability, serve the national interest, and protect depositors”.

“Furthermore, the CBC notes that it has undertaken, and continues to undertake, efforts to co-operate with all stakeholders in order to arrive at the optimum solution, as soon as possible, in service of the above aims, always in accordance of legislative provisions,” the CBC said.

To date, FBME shareholders deny the money-laundering allegations and have resorted to the international arbitration court to have the liquidation and resolution orders lifted.

“The CBC regretfully notes that, despite repeated attempts, no spirit of co-operation has been exhibited, either by the bank and affiliated individuals, or by the Tanzania oversight authority, but is instead constantly faced with actions that do not contribute to the right direction,” it said.

“Specifically, the bank and affiliated individuals issue public statements and unbecoming attacks against the CBC and its staff, in complete contrast with banking practices and etiquette.”

But in order to protect the country’s interests, the CBC said, it declines to comment on “particular claims made in press reports, both by the media and the bank itself, since they directly touch on ongoing legal and international arbitration proceedings”.

By Angelos Anastasiou