CB in trouble over BNPI inaction?

Will the French banker leave Cyprus?

Confusion has fuelled rumours as regards the future and past operations of leading French banker BNP Paribas and its predecessor BNPI, as it has relieved its second local manager in as many years, and may be contemplating downsizing its operations here.

In a related case presently being heard at Limassol District Court, the banking giant’s Cyprus branch is being sued by Mark Man Ltd., a grain trader specialising in the CIS markets, for a record USD 170 mln.

However, the case has brought into the open developments that seem to have missed the hawkish eyes of Central Bank supervisors.

According to documents filed in court, Banque Nationale de Paris “Intercontinentale” that was still registered as an operating company last month, should have commenced winding up procedure as per the Central Bank’s instructions in December 2002, in order to be replaced by BNP Paris Cyprus Ltd. However, this has yet to happen.

Ultimately, BNPI did not follow provisions of the Law on Transfer of Banking Business, where the bank was obliged to publish in the Official Gazette of the Republic the notice of the transfer of banking business “within reasonable time”, after the conclusion of the transfer.

Some 18 months have passed since that “reasonable time”, leaving the Central Bank in a moral dilemma of whether it should impose its authority as a banking supervision and regulatory institution, or allow justice to take its course and await the outcome of the civil suit that could very well determine the future of BNP Paribas in Cyprus.