By Tim Cocks and Ange Aboa
ABIDJAN (Reuters) - Ivory Coast will re-open branches of two major French banks Monday after announcing it was nationalising them to avert economic meltdown, the government of disputed leader Laurent Gbagbo said Friday.
The banking system ground to a halt this week as part of the economic fallout from a dispute over the election of November 28, with banks citing liquidity and security problems and shutting their doors on queues of Ivorians desperate to withdraw cash.
Gbagbo's government announced Thursday it would nationalise the Ivorian branches of Societe Generale and BNP Paribas, Standard Chartered and "City Bank," an apparent reference to Citibank.
The last major international bank operating in the country, Ecobank, also suspended operations Friday. An official at the bank told Reuters: "No bank can work alone under such conditions."
U.S. cocoa futures climbed to their highest in more than a year Friday on the turmoil.
In Paris, the French Foreign Ministry condemned the planned nationalisations, saying they were illegal as they came "from authorities that have no legitimacy to make decisions in the name of the Ivorian state."
The international community has called on Gbagbo, the country's leader for more than a decade, to step down after United Nations-certified results showed he lost the election to rival Alassane Ouattara last year.
But he remains in power with the backing of the army.
Major banks in the main city Abidjan were closed Friday morning. Paramilitary forces in pickups were parked along the "Avenue des Banques," where the main institutions have their offices, and policemen reading newspapers sat outside the entrances to a number of shuttered banks.
Ahoua Don Mello, a spokesman for Gbagbo's government, said meetings with employees at the local units of Societe Generale and BNP Paribas would take place Friday.
"They will open Monday ... a statement will be issued to invite deposit holders and anyone with an account there to come so that banking relations between these banks and the clients is re-established," Don Mello said. He did not discuss plans for Standard Chartered or Citibank.
"DESPERATE MOVE"
The election meant to restore peace to Ivory Coast eight years after a civil war has instead led to a deadlock between Gbagbo and Ouattara, and the nation is as divided as ever.
A pro-Gbagbo court overturned the election result citing fraud, and Gbagbo has defied criticism and threats of a potential military ouster by a West African regional force.
Ouattara has set up a parallel government but remains holed up in a hotel, protected by U.N. peacekeepers. Meanwhile, the economy has crumbled under sanctions and a ban on exports of cocoa, the country's main earner.
Joseph Lake, an analyst at the Economist Intelligence Unit, called the nationalisations a "desperate move."
"We could now be entering the end game in Ivory Coast," he added. "The financial sector will now grind to a halt and this could have consequences for the wider region. Ivory Coast is the largest player in the eight country (West African CFA franc) zone and the financial contagion will spread."
Gbagbo's government said the nationalisation of banks was aimed at ensuring Ivorians were able to access their assets. Panicked Ivorians had flocked to withdraw cash this week, prompting a two-day bank run as branches closed one-by-one.
But the lack of a banking system could make it tricky for Gbagbo to pay army and public sector wages this month.
Five African leaders charged with finding a solution to the crisis are due to meet this weekend, but Ouattara's camp doubts they will succeed and called on Ivorians to mount a Tunisian- or Egyptian-style revolution rather than seek outside help.
(Additional reporting by Lionel Laurent in Paris; Additional reporting and writing by David Lewis; Editing by Giles Elgood)