War-Hit Ivory Coast Banks Seek State Help to Rebuild Businesses
Lenders in Ivory Coast, the biggest economy in West Africa’s monetary union, want help from the government to rebuild their businesses after a crisis sparked by a disputed election slashed profit.
Banks lost as much as 100 billion CFA francs ($209 million) as violence forced many of the 22 lenders to shut their branches for more than two months earlier this year, said Souleymane Diarrassouba, president of Ivory Coast bankers’ association.
“We call on the government for compensation,” he said in an interview Oct. 27. “The economic recovery will pass through the dynamism of private sector, and the banks need to be strong to be capable of supporting it.”
Offices were damaged, especially in the Abidjan neighborhood of Yopougon, a base of support for ex-President Laurent Gbagbo, where automated-teller machines and safe-deposit boxes were ransacked, said Diarrassouba, who is also the head of Banque Atlantique, the country’s second-biggest lender.
Gbagbo refused to cede power to Alassane Ouattara, who was named winner of a November 2010 election. For almost five months, violence escalated, forcing many businesses to halt operations as fighters loyal to Ouattara battled for control of the world’s top cocoa producer. Gbagbo was captured in Abidjan in April. As many as 3,000 people were killed in clashes, according to the International Criminal Court.
Some lenders listed on the Bourse Regionale des Valeurs Mobilieres reported first-half profit declines and losses, according to the Abidjan-based stock exchange, which relocated to Bamako during the crisis. Pretax profit at BICICI, the Ivorian unit of BNP Paribas SA, slumped 91 percent to 365 million CFA francs in the first half of the year. In the same period, Bank of Africa Cote d’Ivoire posted a loss of 612 million CFA francs.
Some banks may also struggle to meet equity-capital requirements of 10 billion CFA francs, set by the Dakar-based Central Bank of West African States, as lenders “absorb the consequences of the crisis,” Diarrassouba said.
Ivory Coast’s economy may contract 5.8 percent this year, before expanding 8.5 percent in 2011 as the government invests in infrastructure and output of cocoa and gold climbs, according to the Finance Ministry.
About half of the lenders’ estimated losses are from outstanding debts that may have to be restructured, Diarrassouba said. The bankers’ association wants the government to review the rules of debt provision and downgrading, he added.
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