International Banks Suspend Ivorian Operations

International Banks Suspend Ivorian Operations

Two international banks have suspended operations in Cote d' Ivoire as a political impasse following a disputed presidential election takes its toll on the economy of the world's top cocoa grower.

French bank BNP Paribas's Ivorian unit, the second biggest banking operation in the country, was closed due to security concerns.

“The entire BCCI network is closed until further notice”.

A spokesperson for Citibank in Paris also said it would be closed, giving no official reason but saying it would continue to monitor the situation.

BNP Paribas and the number one Societe Generale have about two thirds of the Cote d`Ivoire market.

Citibank is a smaller operation with no retail arm but is the largest corporate finance for Cote d' Ivoire's oil and gas operations.

Banks are main export financer

Citibank is the main creditor of its 80,000 barrels a day refinery and the third biggest cocoa exporter financer.

The West African nation has been in turmoil since a disputed November 28 , presidential election between incumbent Laurent Gbagbo and rival Alassane Ouattara.

Acting against the law

Gbagbo's planning minister condemned the bank closures and said they were breaking the law.

“The government condemns the illegal character of this decision by proceeding with their closure; BICICI and Citibank are seriously contravening their obligations under banking law. We will not tolerate these acts of defiance,” budget minister Kone Katinan said on state TV.

UN-certified election commission results named Ouattara the winner, but the result was reversed by a pro-Gbagbo legal body and the incumbent remains in power despite international sanctions and threats of military force.

The power struggle has hit the banking sector as Ouattara, backed by western nations and regional bodies try and cut Gbagbo's access to funds to force him from power.

West Africa's monetary union last month cut off his access to state accounts at West Africa's BCEAO central bank.

Western nations have imposed travel bans and sanctions on a range of individuals and organisations backing Gbagbo.

Cocoa exporters have stopped registering new beans for export as a result of the sanctions and a ban called for by Ouattara.

Liquidity problem

Cocoa futures touched their highest levels in over a year as fears grew that the ban, initially put in place on January 24 for one month, would be extended.

Ouattara has remained trapped in a lagoon-side Abidjan hotel, protected by UN peacekeepers while Gbagbo, who has the backing of the military, remains in control of government buildings.

After being cut off from the regional bank, Gbagbo sent soldiers to seize its Abidjan unit and appropriate local reserves, forcing the bank to close its Cote d`Voire operations completely and causing problems with liquidity and cheque clearing.

Banking sources say the military has since intimidated banks into participating in a new clearing system set up in the building Gbagbo seized and some have received death threats.

Reuters/NAN/Margaret/Yinka