Cypriot Central Bank governor Panicos Demetriades, whose testy relations with island’s
government dogged a tumultuous tenure when Cyprus teetered on the brink of bankruptcy, resigned on Monday.
Demetriades’s resignation was accepted by President Nicos Anastasiades, an official statement from the Cypriot presidency said. Demetriades will work out his notice until April 10.
Anastasiades had said in September 2013 he might ask the Supreme Court to rule on whether Demetriades, an appointee of Cyprus’s former communist administration, could be sacked.
Tensions between the two men have simmered for months, bursting into open animosity when the right-wing Anastasiades was elected Cypriot president a year ago.
There was no immediate official word on why Demetriades resigned. Two sources with knowledge of the matter said Demetriades submitted his letter of resignation to Cypriot
Finance Minister Haris Georgiades, who was in Brussels for a Eurogroup meeting.
One source who saw the resignation letter said Demetriades cited “family and personal” reasons for his departure, and “difficulty in cooperating with the Board of Directors” at the Central Bank.
Demetriades was appointed in May 2012 for a five-year term by then President Demetris Christofias, a communist many blame for misguided policies which led Cyprus to near-economic collapse.
The Central Bank’s board of directors, many of whom were appointed by the present administration, had accused Demetriades of keeping them in the dark on several key issues. Aides to Demetriades said that was a thinly veiled attempt by the presidency to keep the governor in line.
But he was also disliked by key partners in Cyprus’s government for a perception that he undermined Cypriot banks before a chaotic bailout last year.
Anastasiades had openly accused Demetriades, a member of the Governing Council of the European Central Bank, of mishandling the Mediterranean island’s bailout by international lenders last March. But tensions appeared to have calmed somewhat in recent months.
Cyprus had to close a major bank and seize savings held in a second in return for 10 billion euros in international aid from the EU and the IMF.
A former economics professor who taught at Leicester, Demetriades faced constant brickbats for subsequent perceptions he was slow in restructuring the banking sector.
He has maintained that when he took over, less than a year before the bailout, he assumed a poorly regulated banking system which took excessive risks.
The ECB had issued repeated warnings to the Cypriot authorities not to interfere in his work.
Persons close to Demetriades had frequently complained that he was the target of a “well-orchestrated campaign undermining not only central bank independence but an attempt to force the governor to resign.”
The ECB had no immediate comment.