ABIDJAN/DAKAR Feb 18 Ivory Coast will re-open
branches of two major French banks on Monday after announcing it
was nationalising them to avert economic meltdown, the
government of disputed leader Laurent Gbagbo said on Friday.
Here as some questions and answers about the proposed
WHO IS TARGETED?
The two main banks targeted in the announcement late on
Thursday were a unit of France's Societe Generale (SOGN.PA) and
French BNP Paribas's (BNPP.PA) unit BICC.CI, both of which
suspended operations this week.
The official reasoning for targeting these two banks was
that they were among the oldest and biggest, and therefore
essential to keep the economy functioning.
Analysts believe they were prioritised due to the large
number of civil servants and soldiers who hold accounts with the
banks and who will be eagerly awaiting their monthly salaries in
Also mentioned as possible targets were Standard Chartered
(STAN.L) and "City Bank", an apparent reference to Citibank
(C.N). A number of other international banks which also closed
this week were not immediately targeted for nationalisation.
HOW WILL IT WORK?
Gbagbo government spokesman Ahoua Don Mello said staff at
the two French banks would meet government officials on Friday
and open for business on Monday "by all means necessary".
Don Mello said the bank employees would now work for the
government and there was sufficient expertise in-country to
overcome technical issues for making the banks operate.
But sources with knowledge of the Ivorian banking industry
said the reality was likely to be more complicated.
A lot of the major banks have already evacuated senior staff
who would have access to operating systems. Even if that is not
the case operations in-country can also be disabled remotely.
This would make it virtually impossible for the government
to operate them, one of the sources said. It is not clear
whether the real-time settlement system between banks in-country
will also function, the source added.
WILL IT SOLVE LIQUIDITY PROBLEMS?
Unlikely. The Ivorian banking system's woes stretch back to
the Dec. 2010 move by the West African regional central bank
BCEAO to shut down its Ivorian operations in an attempt to cut
Gbagbo's access to funds and squeeze him from power.
After initially being able to circumvent restrictions by
using loyalists to retain his access to the internal IT system
-- allowing his camp to break into the vault and set up a
parallel clearing network -- Gbagbo's options are running out.
Clients who scrambled to withdraw cash from their accounts
this week are unlikely to start putting deposits back into the
banks until they are really convinced of a return to stability.
The first big test will be whether and how civil servants
and soldiers receive salaries at the end of the month.
Cheques are no longer being accepted, Ivorians are hoarding
cash and money-transfer systems like Western Union have also
ground to a halt. Albeit with a hint of humour, some are talking
about the possibility of moving to a barter economy.
Gbagbo's government insists it still has allies, especially
amongst emerging nations in Latin America, Asia and elsewhere in
Africa. But it is not clear how these nations will actually be
able to help free up the system.
The idea of exiting the CFA franc zone and setting up a new
currency has been floated by some but analysts have warned of
the likelihood of rampant inflation.
WHAT IMPACT WILL IT HAVE ON THE POWER STRUGGLE
The economic shutdown is proof that life under Gbagbo is not
going to be business as usual. But the former history teacher
has, in the past, been the master of portraying himself as a
defender of Ivory Coast's interests against foreign powers.
The impact of the move on the cocoa sector is likely to be
limited: even if it facilitates some of the financial
transactions underpinning the industry, EU sanctions and the
fact that exporters have followed rival presidential claimant
Alassane Ouattara's call for a ban on supplies, means cocoa will
still not get to world markets.
Ouattara and those powers behind the sanctions are being
blamed for ruining the country.
But Ivory Coast watchers note that even during the worst of
the crisis so far, the country's civil servants have always been
paid. A wage-less end of the month would take the country into
Ouattara's camp is calling for an Egypt-style revolution but
given the bloodbath that accompanied the last efforts to protest
on a large scale in December, it not yet clear if the calls will
(Writing by David Lewis; editing by Giles Elgood)