Cyprus Mail

Anastasiades to press ahead with CBC Gov removal

President of the Republic Nicos Anastasiades

President Nicos Anastasiades said on Thursday he would press ahead in seeking the removal of the island’s Central Bank governor, whose handling of an international bailout last March he has sharply criticised.

Anastasiades said he had furnished auditor-general with information backing his claim that Panicos Demetriades is not up to the job.

As an independent official, the Central Bank chief can be removed only with the permission of Cyprus’ Supreme Court.

Asked if he would take the matter to court, Anastasiades told journalists: “I fully respect the constitution of our country and Eurosystem rules … consequently there is no other route but for the legal services of the Republic to process the information and for the relevant recourse to the Supreme Court.”

The president had said in September he might ask the Supreme Court to rule on whether Demetriades could be sacked. Tensions between the two men have simmered for months.

The ECB has issued warnings to the Cypriot authorities not to interfere in his work.

Asked about the dispute in Washington last weekend, ECB President Mario Draghi told a news conference: “We would have a dim view of an attempt to constrain, or to threaten, or to undermine the independence of the central bank.”

On Wednesday, a letter written by Demetriades to Anastasiades asking for a meeting was leaked to the press.

The governor said he wanted to brief Anastasiades about the banking sector, but the president referred him to the finance minister.

“It would be useful to meet, if you had been convinced by previous meetings that there is desire to have an understanding,” Anastasiades said in an interview on Sigma TV on Wednesday evening. “However, I would like to make it clear that I will not let the country get hurt because there is a different mentality on behalf of the governor.”

Anastasiades said the governor can brief him in writing but if it was necessary they could meet in the presence of the finance minister.

Demetriades has been accused by the president of mishandling the island’s bailout by international lenders in March. Cyprus had to close a major bank and seize savings held in a second in return for €10 billion in aid.

Appointed by the previous administration, the Central Bank chief has been criticised by the government for being 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.

One of the main criticisms directed against Demetriades has been how, under his watch, the now defunct Laiki Bank accumulated some €9.0 billion in emergency liquidity aid, only to buckle and fail when the ECB threatened to pull assistance.

“How much independence can a central banker have when, from his statements, it appears he was serving other expediencies instead of his country’s interest,” Anastasiades said.

For the state to get €9.0 billion, the president said of the bailout, it was asked to privatise state companies, seize deposits, make painful cuts, and raise taxes.

“Can you tell me how someone persuaded (the ECB) so that an insolvent bank was given €9.5 billion without all these commitments?” Anastasiades said, suggesting that Demetriades was responsible.

The president also reminded the interviewer of the statement made by Demetriades in the past that Laiki had been kept on a ventilator until February’s presidential elections.

Finance Minister Harris Georgiades was scheduled to meet with Demetriades on Friday.

“It is not an issue of bad relations, but something a lot more serious,” Georgiades told state radio without clarifying.

He said he met Demetriades every week and he had not raised any issue the last time.

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