Last August, Anthony Ward’s Amajaro fund tried, and failed, to corner the cocoa market. He may have been half a year early, as the country may soon let cocoa speculators (at least those on the long side) finally enjoy their day in the sun. After an ongoing political crisis has left the country with two presidents, neither of which is willing to abdicate power peacefully, and technically bankrupt the latest development is the logical: a countrywide bank run.
The Globe and Mail reports that the world’s largest exporter of cocoa, which has now effectively been isolated by the global banking system, following its technical default on $2.3 billion in bonds, is seeing bank after bank shut down as residents are scrambling to withdraw whatever money is available in the financial system.
“A third bank shut its doors Wednesday amid a political crisis in Ivory Coast, as residents in the commercial hub lined up at banks to try to withdraw their savings amid rumours of a cash shortage. British bank Standard Chartered confirmed in an e-mail Wednesday that it had suspended its operations in Ivory Coast, joining two other banks, BICICI and Citibank, and the regional stock exchange.
Hundreds of people marched from one bank to the next in downtown Abidjan Wednesday afternoon, trying to find a working bank machine.” Well, not really a bank run. More like a bank march. However, unlike Egypt, we don’t anticipate the government (one of the two), to start flying in hundreds of millions in currency to placate the mob.
From Globe and Mail:
“They say all the banks are going to close,” said high school guidance counsellor Albert Kramo. “I’ve been to three banks today to try and get out some money before it’s too late.”
Crowds formed outside of several banks which swung their large metal gates closed in order to prevent the front doors from being rushed.
Two months after a contested presidential election that led incumbent leader Laurent Gbagbo to refuse to cede power, international financial pressure supporting his opponent, Alassane Ouattara, has finally made its presence felt.
“Money is drying out,” said business risk analyst Lydie Boka, manager of the France-based firm StrategieCo. “We live in a globalized world, and Gbagbo is trapped.”
Of thirteen banks visited in Abidjan Wednesday, 11 were open for business, though only four had working banking machines, according to an Associated Press tally.
A manager at the Ivorian Chamber of Commerce and Industry said he was certain nearly every bank would close in coming days. He asked not to be named because of the sensitivity of the issue.
Unfortunately for Ivory Coast citizens, deposed president Gbagbo apparently was unable to plunder enough gold in time, nor to make sure he has a working NetJets fractional share.
The Central Bank of West African States, known by its French acronym BCEAO, endorsed Mr. Ouattara’s victory in November’s election nearly two months ago but didn’t succeed in cutting Mr. Gbagbo off from state coffers until it fired its president, a close Gbagbo ally accused of funnelling money to his friend, in January.
Mr. Gbagbo reacted by seizing the central bank’s offices in Ivory Coast, but the electronic financial regulation system, controlled from the head office in Dakar, Senegal, was cut off.
“Gbagbo has been trying to use the BCEAO offices in Abidjan as a central bank,” Ms. Boka said, “but international banks cannot deal with this ad-hoc central bank because of the sanctions, so they’re simply shutting down.”
Which is not to say that senior level executives are not leaving the country. They most certainly are:
Meanwhile, bank managers have been quietly leaving the country ever since the BCEAO threatened criminal proceedings against any bank doing business with Mr. Gbagbo’s central bank, said a Western diplomat who asked not to be named because he is not permitted to speak with the media. Two managers were stopped at the airport this weekend, the diplomat said, and prevented from leaving by police officers loyal to Mr. Gbagbo.
And while we are not certain how likely a spillover effect to regional African nations will be once the country’s people finally decide they have had enough and become truly violent, one thing is certain: cocoa, which recently was trading at one year highs, and over 20% YTD alone, is poised for material gains. Bottom line: BTFD in chocolate… if one materializes.
Submitted by Tyler Durden on 02/16/2011 15:59 -0500
Source: ZeroHedge
1 thought on “Bank Run In Ivory Coast”