The chief executive of Cyprus’s largest lender, Bank of Cyprus, resigned on Tuesday, citing a lack of coordination in dealing with Europe’s banking crisis.
Andreas Eliades was chief executive officer for eight years and instrumental in leading the bank’s foray into neighboring Greece, where the lender is now heavily exposed to its debt mountain. He said he was leaving with immediate effect.
Bank of Cyprus rattled domestic markets by unexpectedly seeking state financial support just prior to a regulatory deadline to bolster its core tier 1 capital last month.
Capital requirements of the island’s second-largest lender, Popular Bank, was a key reason forcing Cyprus into requesting an international bailout on June 25.
Both banks suffered record 2011 losses as a result of a writedown in their portfolios of Greek sovereign debt, an impairment agreed by European leaders, including Cyprus’s president, to make Greece’s debt more sustainable.
The decision proved costly for the island, the eurozone’s third-smallest economy. As a result, Popular Bank required a 1.8-billion-euro capital injection from the state, while Bank of Cyprus has asked for 500 million euros.
In a letter to the board dated July 9, Eliades said there was a lack of coordination in dealing with the banking crisis, but failed to be more specific.
“The challenges we are experiencing throughout Europe are exceptionally difficult, and demand joint mobilization by all, inside and out of the bank,» Eliades said.
“What we see going on around us proves this mobilization does not exist,» he wrote.
The bank said its board would meet on Thursday to discuss Eliades’s succession.
The bank posted record losses of 1.37 billion euros in its full-year 2011 results after the Greek sovereign debt writedown. [Reuters]