BNP Paribas stays on despite legal wranglings

BNP Paribas (Cyprus) Ltd., the successor of the French BNPI’s operations on the island, will be staying on after all, following wild rumours last May that the bank had relieved its second local manager in as many years, was contemplating downsizing its operations here and that staff were abandoning ship.

These rumours were further fuelled by a court case filed by a Limassol-based trading company alleging that BNPI had resorted to a breach of trust and as a result lost millions worth of contracts.

In a case heard at Limassol District Court, the bank was being sued by Mark Man Ltd., a grain trader specialising in the CIS markets, for a record USD 170 mln.

The bank has counterd the allegations suggesting that the trading company owes it several million dollars in unpaid loans and unsettled dues.

In an earlier telephone conversation, BNP Paribas’ legal counsel, Demetris Araouzos of Chrysses Demetriades & Co., told the Financial Mirror that there was no issue of the bank closing, denying all rumours about the bank’s demise as being unfounded.

The case has also left the Central Bank of Cyprus exposed as Banque Nationale de Paris “Intercontinentale” should have commenced winding up procedure as per the Central Bank’s instructions in December 2002, in order to be replaced by BNP Paribas Cyprus Ltd.

However, this has yet to happen and it was suggested that the Central Bank was waiting for advice from the Attorney General’s office in order to proceed.

A Central Bank official explained that any case of breach of trust or confidentiality or the disclosure of information should primarily concern the bank in question as this is a fiduciary duty of that bank and is not necessarily a regulatory issue.

The Central Bank of Cyprus is responsible for the implementation of the Capital Regulatory Directive, a.k.a. Basel II, which is founded on three pillars: operational credit risk, regulatory role and market discipline.