THE GOVERNMENT conceded yesterday it was not on the same page with the Central Bank Governor, confirming the growing rift between the two sides.
“There is indeed a serious matter at hand...and it needs to be resolved,” Finance Minister Harris Georgiades told newsmen.
But, he hastened to add, the two sides are “obliged to come to an understanding.”
One point of contention, said Georgiades, has been the Governor’s failure to swiftly appoint a new board to the Bank of Cyprus, an omission which has left the bank “rudderless.”
The government wants Bank of Cyprus to move away from its current status of being under administration as quickly as possible, even if that entails appointing an interim leadership, the minister said.
“The Central Bank had made a commitment that this status should not last beyond a couple of days. Unfortunately, two weeks have elapsed and the bank is still in administration, and this is a very serious issue,” he added.
Georgiades revealed also that he has sent Central Bank chief Panicos Demetriades a list of 14 persons as potential candidates for the Bank of Cyprus board.
He went on to censure Demetriades for having recently blown the whistle by telling foreign media that he was being undermined by the government.
While attending a summit of eurozone bankers in Dublin, Demetriades claimed the Cyprus Central Bank’s independence was being attacked by the government while at the same time his family was being threatened by people who lost money in the crisis.
Demetriades complained also that the government committed to selling state gold without first consulting him.
The governor has been criticised for his overall conduct throughout the banking crisis since taking over the regulator last May, but also for his day-to-day handling of matters in the days following the recent decision to wind down Laiki Bank and restructure Bank of Cyprus.
Some accuse him of misleading parliament regarding the mandate of the investigation by Alvarez and Marsal (A&M) into the activities of the island’s two biggest banks which have led Cyprus to the verge of bankruptcy.
His critics argue that the A&M investigation was restricted mainly to investigating the Bank of Cyprus rather than Laiki - the main problem bank - despite parliament being told otherwise in a letter sent by Demetriades to the House Speaker in November.
The House Watchdog Committee plans to quiz Demetriades on this next week, in a bid to determine whether the banker had misled parliament; unless they get satisfactory answers, some legislators want to ask the Attorney-general to investigate the CB chief.
Dismissing the central banker is legally difficult, and besides the official has the backing of the European Central Bank. In a recent letter addressed to President Anastasiades, ECB boss Mario Draghi pointed out that a central bank governor could only be dismissed on grounds specified by EU law, adding that any dismissal would be subject to review by the EU’s Court of Justice.
Meanwhile the Central Bank yesterday asked commercial lenders to grant a 60-day grace period to people unable to pay back loans as a direct result of the Eurogroup decision of March 25. That decision wiped out uninsured deposits held in Laiki, and has frozen access to amounts above €100,000 in the Bank of Cyprus.
Such loans are not to be considered as non-performing during the grace period, the CB said, also urging banks not to charge interest on late payments or other charges.
Central Bank Governor Panicos Demetriades: not on good terms with the government