The bank chairman set to take the key post of finance minister in Greece's new government turned down the job on Monday as he received hospital treatment for what a spokesman said was a "chronic" condition.
Vassilis Rapanos, who heads up Greece's biggest bank, the National Bank of Greece, was nominated on Thursday following landmark elections on June 17 but was taken to hospital on Friday suffering from strong stomach pains and nausea.
Unlike other members of the cabinet Rapanos had not been formally sworn in, meaning that the finance minister from the previous government, George Zanias, an experienced negotiator with Greece's foreign creditors, is still in charge.
The new government has been hobbled by health troubles after less than a week in office, with Prime Minister Antonis Samaras undergoing a major eye operation over the weekend that will force him to miss a critical European Union summit this week.
This has added to uncertainty as the government heads for a showdown with the EU and International Monetary Fund over its bid to ease the terms of a massive bailout deal that is keeping the economy on life support.
Officials said Greek President Carolos Papoulias will have to attend the EU summit on Thursday and Friday after Samaras left hospital on Monday under orders to stay at home for at least a week to recover from the operation on his retina.
The 83-year-old Papoulias, a former foreign minister, occupies a largely ceremonial post and is not normally involved in high-level diplomacy.
At the summit, Greece is expected to outline its plan to ease the austerity terms of the bailout, even though chief paymaster Germany has already signalled there is little room for negotiation and no decisions are expected at the talks.
Samaras's absence has delayed the holding of a formal vote of confidence in parliament for the new three-party coalition that is now expected next Monday.
The health troubles have also delayed indefinitely a visit by EU and IMF auditors originally scheduled for Monday, which is a key precondition for Greece to receive any more loans to supplement its rapidly shrinking cash reserves.
The announcement about Rapanos came after days of rumours on the 65-year-old's condition.
"My recent hospitalisation shows my health problem has not been overcome," Rapanos said in a letter to Samaras made public by the premier's office.
"Following discussions with doctors, I have decided my state of health does not allow me to take on these duties for the moment."
The nomination was being closely watched by the markets and had been hailed as positive because of Rapanos's experience in both the banking sector and public office as a top economy ministry official when Greece joined the euro.
Earlier on Monday, government spokesman Simos Kedikoglou had denied that Rapanos was planning to decline the nomination.
"Rapanos assured Samaras that this is a chronic problem that he has learned to live with, and that he can carry out his duties," he said.
Greek stocks meanwhile closed down 6.84 percent in line with declines on other European markets amid uncertainty over the outcome of the summit.
Bank shares were hit particularly hard, with Alpha bank losing 18.4 percent.
The new government wants a two-year extension on its fiscal adjustment plan, as well as a halt in thousands of planned civil service job cuts and a reversal in minimum-wage cuts and labour reforms that facilitate layoffs.
Samaras and his conservative New Democracy party won the vote with a pro-euro platform, but more than a quarter of the vote still went to the radical leftist Syriza party, which has called for the bailout deal to be torn up.
European leaders have signalled that a limited time extension could be negotiated with Greece but that no other major concessions would be allowed, and chief paymaster Germany on Monday said there would be no deal at the summit.
Samaras's coalition partners, the leaders of the socialist and moderate leftists, meanwhile said they would soon accompany the prime minister on a tour of European capitals to lobby for renegotiation of the bailout deal.
Greece has been forced to seek bailouts twice from the EU-IMF-European Central Bank troika of creditors, first for 110 billion euros in 2010 and then for 130 billion euros earlier this year. It has also had a 107-billion-euro private debt write-off.