“Large depositors” file lawsuits in UK, France and US against Lebanese banks

Lebanon Economy
2022-12-21 | 07:42
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“Large depositors” file lawsuits in UK, France and US against Lebanese banks
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3min
“Large depositors” file lawsuits in UK, France and US against Lebanese banks
Three countries—Britain, France, and most recently, the United States—are currently dealing with claims filed by depositors in Lebanese banks to recover their funds.
 
The so-called "large depositors" have brought the most lawsuits in Britain.
 
However, banks are withholding the total number of claims. Still, they believe that the decision made in the first case encouraged other depositors to file lawsuits.
 
They also say that the first case established a precedent on which depositors rely to recover their deposits, which total tens of millions of dollars.
 
Banks have warned against continuing to file lawsuits in these nations because the lawsuits won by large depositors deplete the banks' remaining dollar liquidity, which small depositors benefit from, thanks to Circular 158. 
 
As a result, these lawsuits filed abroad have been not only against banks but also against small depositors, according to banking sources.
 
Banking sources also demanded that the Capital Control Law be approved quickly to stop these lawsuits.

The claimants rely on the fact that there is currently no law in Lebanon prohibiting withdrawals and transfers; however, once a Capital Control law is established, banks will have access to the legal documentation necessary to defend against claims of this nature.
 
While Circular 158, which gives depositors $400 in fresh money each month, benefits 200 thousand accounts, the banks reject the idea of the ceiling of withdrawal rising above $1,000 as this will increase the number of accounts that want to benefit from it and cause the banks' dollars to run out quickly.
 
The Association of Banks in Lebanon (ABL) and the Banque du Liban discussed the possibility of replacing the Capital Control with a circular relating to transfers and withdrawals. Still, the Banque du Liban responded that this matter could only occur in accordance with a law.
 
At the end, it is necessary to recognize the rights of depositors and their need for their deposits. At the same time, it is impossible to ignore the necessity for banks to continue operating because, in the event of their total failure, even the tiny portion that depositors receive now will not be available.
 

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