Central bank chief resigns in recession-hit Cyprus

NICOSIA, Cyprus – Cyprus central bank chief Panicos Demetriades, whose performance came under fire over the island’s banking crisis last year, resigned on Monday, March 10, the president’s office announced.

President Nicos Anastasiades accepted the resignation, which came in a letter handed to the Cyprus finance minister at a meeting in Brussels in the presence of a European central bank representative, it said.

No reason was given for the surprise move.

The president “thanked Mr Demetriades for his contribution in the great effort that has been undertaken over the past year to rescue the country from bankruptcy and to stabilise the financial sector,” it said in a statement.

The resignation of Demetriades, 55, less then two years into the job, would take effect on April 10, in keeping with the month’s notice in his contract.

Last September, Anastasiades criticized the governor’s performance and said that he no longer had confidence in him.

The rightist leader said he was seeking legal action to remove Demetriades, since under the Cyprus constitution a central bank governor can only be dismissed by the courts.

Demetriades, named by Anastasiades’ communist predecessor Demetris Christofias, came under criticism for his handling of a 10-billion-euro ($13.8-billion) international bailout last year to rescue the island’s banking system from collapse.

The bank chief was at the helm during negotiations to navigate Cyprus through the crisis that led to Nicosia agreeing a painful bailout involving an unprecedented haircut on deposits.

Cyprus shut its banks for two weeks during the bailout crisis and introduced strict capital controls which have been relaxed but are still in place.

Anastasiades accused Demetriades of being slow to respond to the economic fallout.

But the European central bank warned against political pressure on the governor, who refused to stand down.

Demetriades said the island’s strict adherence under his tenure to bailout conditions laid down by international lenders were factors that earned praise from the Eurogroup and the IMF.

Cyprus has passed 3 evaluations from the troika of international lenders paving the way for it to receive much-needed rescue funds.

But some members of the central bank board have been openly critical of Demetriades, whose family has reportedly received anonymous threats.

Last year, Demetriades was also questioned by police in connection with the validity and terms of a contract which the central bank signed with London-based consultancy firm Alvarez & Marsal. – Rappler.com