Portuguese central bank to assess governor's conduct - local media

FILE PHOTO: ECB governing council member Mario Centeno speaks during an interview with Reuters, in Lisbon

By Catarina Demony

LISBON (Reuters) -The Bank of Portugal's ethics committee will meet on Monday to evaluate the conduct of governor Mario Centeno, whose independence came into question after the departing prime minister proposed him as a potential replacement, local media said.

Antonio Costa stepped down on Tuesday over an investigation into alleged illegalities in his government's handling of green energy projects, forcing President Marcelo Rebelo de Sousa to call a snap election for March 10. Costa denies wrongdoing.

On Thursday Costa said that, as an alternative to an election, his Socialist party (PS) had proposed to Rebelo de Sousa that he appoint Centeno, a respected European Central Bank policymaker and former finance minister in Costa's administration, as premier.

Local media reported that Centeno had agreed to let his name go forward, raising concerns that his links to the PS remained strong and calling into question his independence if he remained central bank governor.

Rebelo de Sousa rejected Costa's proposal and called the election instead.

Opposition parties were quick to react, with the parliamentary leader of the main opposition Social Democrats, Joaquim Miranda Sarmento, saying the episode was "another demonstration ... of his (Centeno's) lack of independence".

Centeno's quick move from the finance ministry to the central bank in July 2020, during Costa's second term, had previously raised eyebrows. Centeno announced his departure from the finance ministry in June 2020 and was nominated a month later.

On Saturday evening, in a televised address, Costa said he had proposed Centeno to the president because of his "solid government experience" and because he was admired at home and abroad. Centeno was president of the Eurogroup of euro zone finance ministers from January 2018 to July 2020.

Costa said Centeno would only have given a "definite answer" to the proposal after speaking to the president and understanding the terms of his potential appointment.

The online economic newspaper Eco said the ethics committee was gathering information about Costa's proposal of Centeno and would meet on Monday to evaluate the allegation of lack of independence.

A central bank spokesperson said it was up to the committee to comment on the matter.

The newspaper Jornal de Negocios said the committee would publish its opinion shortly after the meeting.

One of its responsibilities is to supervise the conduct of the bank's directors. It meets every three months, or more often if required.

(Reporting by Catarina Demony and Sergio Goncalves; Editing by Kevin Liffey)