* Cypriot governor's relations bad with government
* Cites personal, family reasons in letter
* Cypriot president had sought his removal
* Demetriades says announcement will be issued "shortly"
By Michele Kambas
NICOSIA, March 10 Cypriot Central Bank governor
Panicos Demetriades, whose testy relations with the island's
government dogged a tumultuous tenure when Cyprus teetered on
the brink of bankruptcy, resigned on Monday.
President Nicos Anastasiades, who had been pressing for
Demetriades's departure ever since last year's banking collapse
and international bailout, accepted his resignation, an official
statement said. Demetriades will work out his notice until April
The president said in September he might ask the Supreme
Court to rule on whether Demetriades, an appointee of Cyprus's
previous communist administration, could be sacked.
Tensions between the two men have simmered for months,
bursting into open animosity when the right-wing Anastasiades
was elected Cypriot president a year ago and almost immediately
had to apply for a financial rescue.
Demetriades is a member of the Governing Council of the
European Central Bank since Cyprus is in the 18-nation euro
The ECB issued repeated warnings to the Cypriot authorities
last year not to interfere with the governor's work. But on
Monday it merely said it took note of his resignation.
There was no immediate official explanation of the reasons
for Demetriades's departure. In a text message to Reuters,
Demetriades said a statement would be issued shortly.
It was also unclear who his successor would be. One online
news portal, Sigmalive, said Chrystalla Yiorgaji, Cyprus's
auditor-general, was a prime contender for the spot.
Two sources with knowledge of the matter said Demetriades
submitted his letter of resignation to Cypriot Finance Minister
Haris Georgiades, who was in Brussels for a Eurogroup meeting.
An ECB official was present.
One source who saw the resignation letter said Demetriades
cited "family and personal" reasons for his departure, and
"difficulty in cooperating with the Board of Directors" at the
Demetriades was appointed in May 2012 for a five-year term
by then President Demetris Christofias, a communist many blame
for misguided policies which led Cyprus to near-economic
The Central Bank's board of directors, many of whom were
appointed by the present administration, had accused Demetriades
of keeping them in the dark on several key issues.
That, they alleged, included a clause in a consultants'
contract that they could claim a percentage of money required
for the bailout of Cypriot banks. That process was controversial
because for the first time in the euro zone debt crisis it was
financed partly by raiding savers' deposits, known as a bail-in.
Cyprus is to receive 10 billion euros in bailout money from
the EU and IMF, but it didn't include its two main commercial
banks, one of which had to fold and the other to seize
depositors' savings to recapitalise.
In documents seen by Reuters, Demetriades maintained at the
time that he agreed to the clause under duress.
Aides to Demetriades said the governor was constantly being
cornered, and that a hostile board was a thinly veiled attempt
by the presidency to keep the governor in line.
But he was also disliked by key partners in the Nicosia
government for a perception that he undermined Cypriot banks
before a chaotic bailout last year.
Anastasiades openly accused Demetriades of mishandling the
Mediterranean island's bailout by international lenders last
March. Tensions appeared to have eased in recent months.
A former economics professor who taught at Leicester
University in England, Demetriades faced constant criticism for
his perceived slowness to restructure the banking sector.
He has maintained that when he took over, less than a year
before the bailout, he inherited a poorly regulated banking
system which took excessive risks.
Persons close to Demetriades had complained that he was the
target of an orchestrated campaign to undermine central bank
independence by attempting to force the governor to resign.
But the ECB, guardian of central bank independence, gave him
only a perfunctory send-off.
"The ECB takes note of the resignation of Panicos
Demetriades who has been the governor of the Central Bank of
Cyprus through very difficult times and played an important role
in the implementation of the adjustment programme," an ECB
"We count on a fruitful cooperation with his successor."