The chairman of the Bank of Cyprus abruptly stepped down after a special administrator was appointed to oversee its restructuring in the wake of a painful bailout of the island nation by international lenders.
Andreas Artemis' resignation, The New York Times reports, was "not wholly unexpected," but "still caught the market by surprise and was a further reminder of how volatile and uncertain Cyprus' financial system has become in recent days."
John Psaropoulos, reporting for NPR from the capital, Nicosia, says Artemis' resignation comes as the Bank of Cyprus prepares to absorb the country's second-biggest lender, Laiki Bank. In the process, depositors with more than $130,000 in their accounts will be levied a one-time charge of as much as 40 percent of their savings.
"But while both banks are crunching the numbers, nobody knows what their assets will be at the end of the day," Psaropoulos says. "Today's resignation [of Artemis] could throw a wrench in the entire process."
He says employees, unsure about their jobs, protested outside the Bank of Cyprus headquarters in Nicosia.
On Monday night, Cyrpus' central bank appointed Dinos Christofides to act as a special administrator for the Bank of Cyprus. He tells Reuters he will oversee "the restructuring of the bank and the absorption of part of Cyprus Popular Bank," known as Laiki Bank.
"It means that from now until further notice I will be running the bank," he said. "It could be short term ... or it could be longer."
Meanwhile, Greece's Piraeus Bank agreed Tuesday to buy the Greek operations of three Cypriot banks for $678 million, according to The Associated Press:
"Piraeus, which was selected last Friday to take over the Greek units of the Bank of Cyprus, Laiki and Hellenic ... says the Cypriot bank branches in Greece would reopen Wednesday, a day earlier than in Cyprus."
Update at 2:50 p.m. ET: Cypriot Finance Minister Defends Decision To Merge Banks
Finance Minister Mihalis Sarris says Cyprus had no choice but to agree to a European-led bailout and to merge the country's two biggest banks.
Sarris says a default in Cyprus would have forced it out of the eurozone and been an "absolute disaster" for all Cypriots, leading to massive job losses, NPR's Psaropoulos says.