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UK court orders Lebanese banks to pay $4m to saver

Customers use an automated teller machine (ATM) outside an Audi Bank SAL bank branch in Beirut, Lebanon, on October 30, 2019 [Hasan Shaaban/Bloomberg via Getty Images]
Customers use an automated teller machine (ATM) outside an Audi Bank SAL bank branch in Beirut, Lebanon, on October 30, 2019 [Hasan Shaaban/Bloomberg via Getty Images]

A London court has ordered two Lebanese banks to pay a depositor $4 million of his money locked in Lebanon's crippled banking system by informal capital controls in place since a financial meltdown in 2019, the first such ruling in Britain, Reuters reports.

The High Court of Justice, Queen's Bench Division, ordered Bank Audi and SGBL to make the payments, amounting to about $1.1 million and $2.9 million respectively, to claimant Vatche Manoukian by March 4, a copy of the ruling seen by Reuters said.

"Bank Audi will abide by the ruling of the British court," a Bank Audi official told Reuters.

SGBL did not immediately respond to a request for comment.

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Lebanon's financial system collapsed in 2019 after years of unsustainable financial policies, corruption and waste. Banks imposed tight controls on accounts, including a de facto ban on withdrawals of dollar-denominated deposits and limits on withdrawals in local currency.

These controls were never formalised with legislation and have been challenged in local and international courts, with mixed results.

A UK court in December ruled in favour of a Lebanese bank in a case brought by a depositor, considering the bank had discharged its debt to the plaintiff by issuing checks for the value of his deposits.

Many Lebanese banks have resorted to discharging dollar-denominated funds via banker's cheques which cannot be cashed out in dollars and are, instead, sold on the market at about a quarter of their value.

Just a week prior, a French court had ruled in favour of a saver residing in France in a case she brought against a bank which had also issued checks for her account balance, saying the unilateral move by the bank, opposed by the claimant, meant the bank had not fulfilled its obligations.

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Europe & RussiaLebanonMiddle EastNewsUK
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