Libya’s central bank Governor Sadiq al-Kabir says he and other senior employees of the institution have been forced to flee the country to escape threats from armed militia, the Financial Times reported.

“Militias are threatening and terrifying bank staff and are sometimes abducting their children and relatives to force them to go to work,” said al-Kabir in a telephone interview the newspaper published on Friday.

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Will turmoil in Libya spill over into the region?

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The Central Bank of Libya, which controls billions of dollars in oil revenue, is at the centre of the latest political crisis to hit a country riven with conflict since the 2011 NATO-backed overthrow of longtime ruler Muammar Gaddafi, which is now divided between two rival administrations in the east and west.

This latest spat between the two administrations escalated on Monday, when Tripoli-based Prime Minister Abdul Hamid Dbeibah, leading the internationally recognised Government of National Unity based in western Libya, attempted to remove al-Kabir, sending a delegation to take over the central bank governor’s office.

According to the FT report, tensions between the two men were mounting. Al-Kabir had accused the prime minister of “overspending and painting a misleadingly ‘rosy’ picture of the economy in his speeches”. Critics of the governor have accused him of mishandling oil revenues.

In response to attacks on the bank’s leadership and employees, the Benghazi-based eastern government, headed by Prime Minister Osama Hammad, announced on Monday that it was shutting down oilfields.

The eastern government is not recognised internationally, however its military leader, Khalifa Haftar, controls most of Libya’s oilfields.

Al-Kabir told the FT that attempts by Dbeibah to replace him were illegal, and contravened United Nations negotiated accords on leadership appointments at the financial institution.

Banking suspended

Reporting from Tripoli, Al Jazeera’s Malik Traina said that nobody seemed to be in full control of the bank.

The Tripoli-based Presidential Council has appointed a new board of directors, the upheaval leading to the suspension of most banking operations in the country, with people unable to access their money or make transfers.

“People don’t know what’s going on,” said Traina. “The new board of directors is in control of the building. The outskirts of the central bank are being highly guarded. There’s a huge security presence by the Ministry of the Interior.”

While al-Kabir had called on employees to stay away from the bank’s premises, the new board of directors had told them to come in and start working. “The staff of the central bank are really confused about what they should do,” said Traina.

“Banking transactions have been suspended for nearly a week now, so people can’t transfer money. There’s a huge liquidation problem, so they can’t pull out their money either. Also, there are threats that the salaries of public employees will be delayed,” he said.

“From the day this problem started, prices are going up,” said Amal Dalha, a Tripoli resident, speaking to Al Jazeera. “Why do people work? They work to get their salaries to pay for their needs. Now they say the salaries are frozen and there’s now talks that it could be that way for months. How are people going to live?”

Instability

The crisis over the control of the central bank creates yet another level of instability in the oil-rich country, eastern and western factions drawing backing from Russia and Turkey respectively.

The eastern authorities said on Monday that the shutdown applied to all fields, terminals and oil facilities, without specifying how long it would last.

The UN Support Mission in Libya (UNSMIL) this week called for the suspension of unilateral decisions, the lifting of force majeure on oil fields, the halting of escalations and use of force, and the protection of central bank employees.

According to Traina, the mission is “meeting with stakeholders” and is planning to convene an “emergency meeting with all parties involved” to come up with a solution.