Ivory Coast election row prompts global banks to shut

BBC News, 14 February 2011

Ivory Coast crisis

• Life on hold
• Tensions simmer along buffer zone
• Guide to key players
• Q&A: Ivory Coast election crisis

Ivory Coast's disputed presidential election has prompted leading banks Paribas and Citibank to suspend operations.

Ivory Coast's farmers provide a third of the world's
supply of cocoa

The move by the two large international banks comes as the power struggle following the election escalates.

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

Citibank gave no official reason for its move.

It said it would continue to monitor the situation.

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

A United Nations-backed election commission named Ouattara the winner, but the result was reversed by a legal body and Laurent Gbagbo remains in power despite the threat of international sanctions and military force.

BNP Paribas and number one Societe Generale between them have around two thirds of the Ivory Coast market.

Citibank is the largest corporate financer for Ivory Coast's oil and gas operations and the third biggest cocoa exporter financer, although it has has no retail branches.

'Reputational risk'

Standard Bank analyst Samir Gadio told the Reuters news agency that there was a "reputational risk" for banks that continue to operate in Ivory Coast as they would be seen as allowing Gbagbo's regime to survive.

Western nations put in place travel bans and sanctions on a range of individuals and organisations backing Gbagbo.

Cocoa exporters are also refusing to cooperate with the regime.

Ivory Coast is the biggest cocoa producer in the world and the price of cocoa touched their highest levels for a year on Monday.

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

The budget minister Kone Katinan said on state TV: "The government condemns the illegal character of this decision ... By proceeding with their closure, (the banks) are ... seriously contravening their obligations under banking law. (We) will not tolerate these acts of defiance."

Standard Chartered's Samir Gadio said: "Gbagbo is not going to leave just because the banking system has shut down ... he will leave the day his life is at stake. But this is going to speed up the endgame. I don't see how the salaries are going to get paid."

Laurent Gbagbo had previsously ordered the seizure of all local branches of the Central Bank of West African States (BCEAO).

Ivory Coast is part of the newly-formed eight-country West African CFA monetary zone, with a single central bank based in Dakar, Senegal, but with national headquarters in each country.

Without access to government funds, it is unclear whether Mr Gbagbo will be able to continuing paying the country's military and security forces.

Related Article:

Ivory Coast government takes control of foreign banks