ISTANBUL - Libya's central bank, at the centre of a weeks-long crisis that has slashed oil output, remains cut off from the international financial system, its veteran governor who was removed by political factions in a contested move told Reuters on Thursday.

Sadiq al-Kabir, speaking from self-imposed exile in Istanbul, said the Central Bank of Libya (CBL) board appointed by western Libyan factions to replace him controls the country's internal payments system but foreign banks are not dealing with it.

"All international banks that we deal with, more than 30 major international institutions, have suspended all transactions," he said, adding that he also remained in contact with other institutions including the International Monetary Fund, the U.S. Treasury and JPMorgan.

"All work has been suspended at the international level. Therefore, there is no access to balances or deposits outside Libya," he said.

The U.S. Treasury did not immediately respond to requests for comment. JPMorgan declined to comment, saying it could not discuss client relationships.

An IMF spokesperson said the fund was closely following developments on the Central Bank of Libya's management and that it supports the United Nations Support Mission in Libya's efforts to reach an agreement to end the standoff.

Kabir said the board appointed by the western factions had, however, gained control over Libya's internal transactions systems, including salary payments.

"The internal part, the employees have returned and the systems are working," he said.

The disputed board appointed by Presidency Council head Mohammed al-Menfi last month has said it has granted letters of credit in dollars and euros to several companies and has previously denied that foreign banks are not dealing with it.

Kabir hopes to be reinstated as governor through U.N.-backed negotiations between the House of Representatives parliament in eastern Libya and the High State Council (HSC) based in Tripoli in the west, to resolve the crisis.

He said he is in touch with both the parliament and the HSC, but not with Menfi or Prime Minister Abdulhamid al-Dbeibah.

Both the parliament and HSC have opposed Menfi's sacking of Kabir, saying it breached a 2015 agreement endorsed by the international community that forms the legal basis for Libyan politics.

The U.N.-backed talks are aimed at establishing a mechanism for appointing the central bank governor and for managing a short interim period.

"According to contacts with the parliament and the High State Council, both are insistent on implementing the laws in force and the political agreement. This implicitly means the inevitable return of the governor," he said.

While the parliament and HSC both opposed Menfi's dismissal of Kabir, the two bodies have been aligned with rival forces for most of the past decade and may find it hard to agree on a long-term solution, analysts say.

(Reporting by Hani Amara in Istanbul, Yousef Saba in Dubai and Ahmed Elumami in Tripoli; writing by Angus McDowall; Editing by Hugh Lawson and Kim Coghill)