Tuesday

4th Oct 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Exclusive

EU officials were warned of risk over issuing financial warning

The European watchdog for systemic economic risk last week warned of "severe" threats to financial stability — but internal notes show top-level officials expressed "strong concerns" over the "timing" of such a warning, fearing publication could further destabilise financial markets.

News in Brief

  1. Czechs warn joint-nationality citizens in Russia on mobilisation
  2. Greece to unveil proposal for capping EU gas prices
  3. Four dead, 29 missing, after dinghy found off Canary Islands
  4. Orbán: German €200bn shield is start of 'cannibalism in EU'
  5. Lithuania expels top Russian diplomat
  6. Poland insists on German WW2 reparations
  7. Russia halts gas supplies to Italy
  8. Bulgaria risks hung parliament after inconclusive vote

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Last-minute legal changes to Bosnian election law stir controversy
  2. EU wants probe into alleged war crimes by Azerbaijan
  3. EU officials were warned of risk over issuing financial warning
  4. EU debates national energy plans amid calls for more coordination
  5. What Modi and Putin’s ‘unbreakable friendship’ means for the EU
  6. EU leaders have until Friday for refugee resettlement pledges
  7. Cities and regions stand with citizens and SMEs ahead of difficult winter
  8. Editor's weekly digest: A week of leaks

Join EUobserver

Support quality EU news

Join us