February 16, 2011 / 1:55 PM / 8 years ago

UPDATE 3-Queues form at Ivory Coast banks as crisis deepens

* Ivorians scramble to withdraw cash from banks

* Four international banks suspend operations

* Financial sector at heart of Ivorian power struggle

(Adds Gbagbo planning minister, updates Eurobond, edits)

By Tim Cocks and Ange Aboa

ABIDJAN, Feb 16 (Reuters) - Long queues formed outside banks in Ivory Coast’s main city, Abidjan, on Wednesday as Ivorians rushed to withdraw their cash from a banking system that has been paralysed by the country’s post-election power struggle.

In the first sign of an anticipated run on the banks in the world’s top cocoa grower, nervous account holders hoarded money as cash machines ran dry and banks limited withdrawals.

Ivory Coast has been in turmoil since a disputed Nov. 28 poll between incumbent Laurent Gbagbo and his rival Alassane Ouattara, widely recognised as winner of a poll that Gbagbo has been internationally condemned for refusing to concede.

Standard Chartered became the latest international bank to suspend operations in Ivory Coast, bringing the total to four.

Other banks are expected to follow. Liquidity has dried up since West Africa’s central bank cut Gbagbo’s access to state accounts and he responded by seizing its Abidjan branch.

“I’ve come to the bank because I need to get my money out as soon as possible,” said Koni Mamadou, a 40-year-old trader in a shiny silk robe, mark of West Africa’s affluent middle classes.

“We’re all afraid because you never know what will happen next,” he added, waiting in a line of 50 or 60 people outside a branch of Ecobank in Abidjan’s leafy Deux Plateaux suburb.

Some jostled at the front as a security guard held them back, a scene repeated at banks across the lagoon-side city.

Ecobank limited withdrawals to 1 million CFA ($2,000) a day. “As you can see, we are swamped by clients. People .. are coming to empty their accounts,” said one of the bank’s managers.

U.N.-certified election results showed Ouattara won the poll, but a pro-Gbagbo legal body reversed the decision and declared the incumbent winner, stirring international outrage.

“WE AWAIT THEIR RETURN”

Sanctions on his camp and backers like ports and cocoa administrators are biting, and Gbagbo has sought a parallel bank clearing system to replace the regional central bank one.

French bank BNP Paribas’s Ivorian unit, the second biggest bank, and Citibank suspended operations on Monday, on security fears and and difficulties operating.

Gbagbo’s government has threatened to take them to court.

Nigeria’s Access Bank and Standard Chartered said they had followed suit on Wednesday.

Bankers had privately reported death threats and invasions of bank buildings by soldiers to intimidate them.

But in a sign the Gbagbo government’s may have been unnerved by the banking exodus, planning minister Justin Kone rowed back on insisting banks clear cheques through their system — some banks had refused, to comply with EU and U.S. sanctions forbidding cooperation with Gbagbo’s government.

“Because they say that this would reassure them, we say go ahead then,” he said, explicitly mentioning BNP Paribas. “For us, there is one system — (our) multilateral one, but those who want to do clearing bilaterally, we can make concessions.”

Asked if they would consider nationalising banks that close up, he said: “We are not there yet. We await their return”.

Ivory Coast’s defaulted Eurobond closed down 1.2 percent to 37 percent at 1641 GMT, and Richard Segal of Knight capital said the bank closures were the main cause.

West Africa’s Abidjan-based stock exchange closed on Tuesday, citing security concerns a week after pro-Gbagbo paramilitary forces invaded its office.

United Bank for Africa (UBA), France’s Societe Generale’s and Togo-based Ecobank remained open.

The election in November was meant to reunite a country that has been divided since a 2002-3 civil war and spur investment.

But the violent political stand-off, which has killed some 300 people, according to the United Nations, has instead deepened divisions and put any hopes of new investment on hold. (Additional reporting by Chijioke Ohuocha in Abuja and Carolyn Cohn in London; Writing by David Lewis and Tim Cocks; Editing by Ralph Boulton)

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