(Seychelles News Agency) - The Bank of Muscat International Offshore (BMIO) in Seychelles is facing re-structuring by the Central Bank of Seychelles (CBS).

The reserve bank took control of the locally-registered BMIO in November following the breakdown of the latter’s foreign correspondent banking relationship the month before, and announced the news of BMIO’s re-organisation in a press statement issued on Friday.

“CBS has throughout been working closely with the Financial Intelligence Unit (FIU) in an attempt to address the issues faced by BMIO,” read the statement. “Following negotiations, CBS has been successful in re-establishing correspondent banking relationship for BMIO which has allowed for some transfers to be effected thus far.”

BMIO’s lack of banking representatives overseas had left the bank unable to process outward foreign currency transfers for its clientele, with clients abroad unable to perform transfers or deposits.

CBS goes on to say that the restructuring of BMIO under Schedule 4 of the Financial Institutions Act 2004 is necessary “in light of tighter requirements on risk management internationally.”

“During the reorganisation, CBS will continue to have full management control over BMIO,” the statement added.

CBS did not elaborate on what the re-structuring would entail or when they expected the bank to resume its normal operations.

Under Schedule 4 of the Act, the reserve bank must as soon as possible draw up a reorganisation plan for the local financial institution, while still taking the interests of all persons concerned with the financial institution into account at all times.

According to the Act, CBS as the reorganizing agent may also “provide for the removal of any director, manager, officer, employee or agent of the financial institution who in the opinion of the Central Bank was responsible for or contributed to the circumstances which led to the seizure of the institution”.

BMI Offshore was registered in Seychelles in July 2008 as a joint venture between BMI Bank in Bahrain and Seychelles-based bank Nouvobanq, each with 50 percent shareholdings.

The bank is based in the 'Capital City' building on Independence Avenue in central Victoria, the capital of the 115-island archipelago.

In a previous statement, the reserve bank reassured the bank’s clients that the issue was “purely of an operational nature”, adding that BMIO was still financially sound and “not threatened” by its lack of correspondent bank.