Cyprus was looking for buyers to take over branches on the island of Tanzania-based bank FBME, which faces a US money-laundering probe, after placing the operation under administration.
The move by the Cyprus central bank late on Monday came in the face of historical allegations by key European Union partners that the island’s once-bloated banking sector had been engaged in laundering money for Russian interests.
International creditors imposed a massive shrinking of the island’s banking system in March last year, in what Cypriots widely regarded as a punitive move in return for an emergency 10-billion-euro bailout of state finances.
“The Central Bank of Cyprus, as supervisory authority, recommended resolution measures… relating to the sale of operations of FBME Bank Ltd, to protect depositors,” government spokesman Nicos Christodoulides said.
“The above actions demonstrate the commitment of the independent institutions of the Republic of Cyprus to safeguard financial stability,” he added.
FBME, whose twin branches on the island are estimated to hold 1.7 billion euros in deposits, denies all charges of wrongdoing and has challenged the allegations from Washington.
In a statement late on Monday the Central Bank of Cyprus said, “The resolution authority has issued a decree, under the powers conferred to it… which places the branch of FBME Bank in Cyprus under resolution.”