Cyprus bank ‘did not do its job’

Deepening a row between the government and central bank, Anastasiades attacked Panicos Demetriades, who was appointed as governor last year, for what he said was sustaining an insolvent bank using a European Central Bank cash lifeline.

The president also said there were damaging delays in resolving problems in the banking sector, after depositors were slapped with massive losses to fund a state bailout last month.

In a letter to ECB President Draghi, Anastasiades speaks of “shortcomings of the Central Bank of Cyprus”.

He was responding to a letter from Draghi last week in which the ECB president warned that any attempt to effectively sack Demetriades could land Cyprus in the European Court of Justice.

In the six-page letter, Anastasiades intimates that Demetriades, an academic economist appointed by the communist-led administration that lost power two months ago, was not fully independent of that government.

The recent resignations of three directors from the central bank’s board “indicate that Governor Demetriades does not even enjoy the trust and the confidence of the institution he is running”, Anastasiades wrote.

The central bank declined to comment.

Demetriades is under growing pressure to resign over his handling of the crisis.