Cyprus Mail
Cyprus

CBC boss fends off mounting criticism

By Elias Hazou

BELEAGUERED Central Bank boss Panicos Demetriades yesterday fended off mounting criticism of delaying the approval of new directors elected to the board of Bank of Cyprus (BoC) by shareholders last week.

The central banker yesterday confirmed that as part of the screening process the regulator has asked six of the newly-elected directors of BoC to furnish additional details that would justify their approval.

In statements to the Cyprus News Agency, Demetriades rejected accusations that the Central Bank of Cyprus (CBC) was prolonging the return to normalcy of the island’s largest lender.
The central banker argued that due to the extraordinary circumstances – all 16 new members were elected simultaneously at the same AGM – the regulator needed a certain amount of time to complete its screening.

The regulator wrapped up its assessment of the BoC board members on Monday, he said, approving 10 of the 16 directors. But it still requires additional information for the remaining six directors.

Far from moving slowly, Demetriades said, the CBC’s Banking Supervision Department worked throughout the weekend on vetting the new directors.

As the supervisory authority for commercial banks, the CBC carries out a “fitness and probity” assessment of their directors.

Asked what happens in the event some of the directors fail to get the green light from the CBC, Demetriades said the BoC’s own nominations committee has the right to begin searching for replacements.

The beleaguered central banker insisted the matter is being blown out of proportion, adding that public bickering on this issue serves only to cause harm to the banking sector.
Media reports said that four of the newly-elected BoC directors were yesterday summoned to the Central Bank for personal interviews, while two more have been asked to supply additional information in writing.

It’s understood that the latter two are: one of the six Russians elected to the board by lawyers and proxies, and Adonis Papaconstantinou, representing the “legacy Laiki” depositors who now control 18 per cent of the BoC shares.

Phileleftheros reports that, out of the six directors now under scrutiny, three are Russian nationals and the other three Cypriots.

Citing sources, the paper said the Russian directors are extremely frustrated with Demetriades. Prior to the bank’s AGM, talks had been held between stakeholders and the resolution authority – which included the Central Bank – to reach a consensus on the nominees for the bank’s board.

During these negotiations Demetriades is said to have okayed the overwhelming majority of the nominees (15 of the 16), but later changed his tune when it came to approving them, this time in his capacity as the supervisory authority.

The daily said moreover that some of the Russian directors under scrutiny have indicated to Demetriades to “quit playing games.”

BoC shareholders elected six Russian nationals overall to the bank’s new board.

Ruling DISY, DIKO and the European Party all fired salvoes at Demetriades for the perceived delay in approving the bank’s new board.

Politicians from all parties – bar AKEL – have been accusing Demetriades of going on a power trip ever since an emergency decree back in March gave the central banker sweeping authority.

Late last month parliament clipped the CBC chief’s wings by broadening the resolution authority so that it now consists of a triumvirate comprising the finance ministry, the Central Bank and the Securities and Exchange Commission.

Previously, the Central Bank had been the sole resolution authority.

Questions are meantime being raised as to the legitimacy of Demetriades’ own appointment to the post of Central Bank governor.

Demetriades yesterday declined comment on the issue.

But a well-known legal expert said on Monday evening that Demetriades’ appointment to the CBC in 2012 was clearly void as it violated the relevant law.

Speaking on the Mega television network, lawyer Achilleas Emilianides cited an article in the law pertaining specifically to the governor of the Central Bank. According to the law, the CBC governor is an “exclusively employed” worker and may not engage in “any other work, profession or business enterprise.”

Demetriades was professor of economics at the University of Leicester when he was approached for the Central Bank job here. He is still listed as a professor on the university’s website, which reads: “Professor Demetriades is currently on leave from the University of Leicester in order to fulfill his new role as Governor of the Central Bank of Cyprus.”

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