Tuesday

27th Jun 2017

Cyprus central bank governor resigns

  • Nicosia was rocked by scandals surrounding the Central Bank and its contracts with an American consultancy (Photo: Kyriakos)

The governor of the Cypriot central bank, Panicos Demetriades, on Monday (10 March) resigned after being investigated over a secret deal he negotiated with an American consultancy firm in connection with his country's €10bn bailout.

Demetriades handed in his resignation to the Cypriot finance minister while in Brussels, where eurozone finance ministers were meeting on Monday.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Quoting a source who saw the letter, Reuters said Demetriades cited “family and personal” reasons for his departure, and “difficulty in cooperating with the board of directors” of the Central Bank.

The board last year issued an internal report seen by EUobserver examining the circumstances in which Demetriades had agreed to a secret fee for Alvarez&Marsal, the consultancy hired by the Central Bank to evaluate the gap needed to be filled in the Cypriot banking sector.

The audit claimed Demetriades kept the board in the dark about the secret fee, which would have included a cut from the seized deposits that were part of the bailout deal. Demetriades said he had to agree to the fee, because he was threatened by Alvarez&Marsal they would leave Cyprus at the height of the bailout negotiations.

According to the Cyprus Mail newspaper, the prosecutor's office in Cyprus has dropped the charges in the Alvarez&Marsal affair, but stressed this had nothing to do with his resignation.

Demetriades will receive a severance pay of €250,000, the same paper reports. Demetriades was under pressure to resign already last year when the scandal about the payment broke. He allegedly asked for €1 million in severance pay.

Demetriades was in his post for two years, after being appointed by the previous - left-wing - administration. He had publicly fallen out with the current Conservative President, Nicos Anastasiades.

The row between the two raised concerns in the European Central Bank, which stressed the importance of national central banks being independent from their governments.

The ECB "took note" of Demetriades' resignation and said he "played an important role in the implementation of the adjustment programme.”

“We count on a fruitful cooperation with his successor,” an ECB spokesperson said on Monday.

Meanwhile, eurozone finance ministers said Cyprus was "on track" in its reforms and could receive the next tranche of bailout loans, amounting to €150 million.

EU approves rescue of Italian banks

The European Commission gave the green light to a €17-billion plan by the Italian government to save Banca Popolare di Vicenza and Veneto Banca.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

Stakeholders' Highlights

  1. International Partnership for Human RightsEU-Kyrgyzstan Human Rights Talks Should Insist on Ending Reprisals Against Critical Voices
  2. European Free AllianceEFA Is Looking for a New Intern
  3. Malta EU 2017Conservation of Atlantic Tunas: International Measures Become EU Law
  4. European Healthy Lifestyle AllianceCan Statin Therapy Interfere With a Physically Active Lifestyle?
  5. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  6. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  7. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  8. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  9. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  10. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  11. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  12. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million

Latest News

  1. 'USB condoms' and migration on Estonia's EU agenda
  2. EU parliament should befriend transparency
  3. EU fines Google €2.4 bn over online shopping
  4. EU Commission could get say on Russia gas pipeline
  5. G20 is 'test run' for Trump-era climate governance
  6. Political conditions for EU funds prompt debate
  7. May defends proposal on EU citizens' rights
  8. UK visitors to pay into EU budget after Brexit