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Lebanon banks to resume strikes

March 9, 2023 at 2:18 pm

Lebanese people are seen in front of a closed bank [Hussam Shbaro/Anadolu Agency]

Lebanon’s commercial banks said today they would resume their open-ended strike on 14 March, citing “arbitrary judicial decisions” that had drained their foreign currency reserves, Reuters reports.

The statement by the Association of the Banks of Lebanon (ABL) said legal measures had allowed borrowers to repay foreign currency loans to the banks at the old official exchange rate of 1,500 Lebanese pounds to the US dollar.

But, it said, banks were also obliged to pay or transfer some foreign currency deposits in cash, in the same currency.

That meant borrowers could pay back loans cheaply, given the Lebanese pound has lost 98 per cent of its value during Lebanon’s financial meltdown, while banks had to pay in foreign currency.

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“For the thousandth time, banks do not print currencies,” the statement said, adding such legal moves “reduce the chances for depositors to recover their deposits in foreign currencies – nay, they eliminate them completely.”

The statement said banks would be forced to resume their strike, and demanded “rapid legal measures to put an end to this imbalance in adopting contradictory standards.”

The banks first closed their doors on 7 February to protest against snowballing legal action they have been facing since Lebanon’s economy began to unravel more than three years ago.

Banks that imposed severe restrictions on withdrawals and transfers in response to the meltdown have faced a string of lawsuits from customers.

Lenders had also complained about investigations by Judge Ghada Aoun who last month filed money-laundering charges against two banks. The ABL has decried her work and demanded a solution for what it called a “deficiency” in the judiciary.

The ABL suspended its strike on 24 February to let customers use banking services after an appeal, it said, from Prime Minister Najib Mikati.

That decision came after Mikati moved to block Aoun’s work investigating Lebanon’s financial sector in the aftermath of its collapse in 2019 following decades of corrupt government, profligate spending and financial mismanagement.

Lebanon is in an economic quagmire and looking for immediate financial support. The country is going through one of the worst financial crises seen globally since the mid-nineteenth century and the Lebanese lira has been devalued.

READ: Lebanon banks to suspend strike at wish of Prime Minister