Houthis, Yemeni government reach financial 'de-escalation' deal: UN envoy

Yemen's government and the Iran-backed Houthi rebels have agreed to halt tit-for-tat banking sanctions as they wrestle for control of the country's financial institutions, the United Nations said on Tuesday.

The Houthis have been fighting a Saudi-led coalition since March 2015, months after they seized the capital Sanaa and most of Yemen's population centres, forcing the internationally recognised government south to Aden.

The rebels and the government had in December committed to a UN-led roadmap to end the war, agreeing to work towards "the resumption of an inclusive political process."

But Houthi attacks on Red Sea shipping since November and subsequent US and British retaliation have put peace talks on hold.

On Monday, the two sides informed Hans Grundberg, the UN envoy to Yemen, that they "agreed on several measures to de-escalate", said a statement from Grundberg's office, which thanked Saudi Arabia for its "significant role" in brokering the deal.

It came as the warring parties were locked in a fight for control over the country's banks, with both facing a severe financial crunch.

Their latest agreement involves "cancelling all the recent decisions and procedures against banks by both sides and refraining in the future from any similar decisions or procedures," the envoy's office said.

In May, the government-controlled central bank banned transactions with six banks in Houthi-held Sanaa for failing to abide by an order to relocate to Aden.

As a result, currency exchange offices, money transfer agencies and banks in government-held areas could no longer work with those financial institutions.

The rebels, who run their own central bank and use different bank notes with different exchange rates, said the move was a disguised attempt by the United States and Saudi Arabia to exert financial pressure on the Houthi banking system.

The Houthis retaliated by banning any dealings with 13 banks in Aden, which means those in rebel-held areas could no longer receive remittances through them or withdraw and deposit funds.

After striking their latest agreement, the warring parties will convene "meetings to discuss all economic and humanitarian issues based on the (UN) roadmap," said Grundberg's office.

It stressed "the need for the parties to collaborate towards an economy that benefits all Yemenis and supports the implementation of a nationwide ceasefire and the resumption of an inclusive political process."

The statement said the warring parties have also agreed to settle disputes over Yemenia, the country's national airline, which has accused the Houthis of freezing its funds held in Sanaa banks.

Meetings will be "convened to address the administrative, technical, and financial challenges faced by the company," the statement said.

Yemenia flights will resume between Sanaa and Jordan, and the number of trips will be raised to three daily, according to the deal. Yemenia will also operate flights to Cairo and India "daily or as needed," the statement said.