Banking crisis persists as Bankmed ruling suspended

The execution of a ruling against Bankmed, which ordered the bank to pay around $200,000 in cash to one of its depositors, has temporarily been suspended pending a decision on an appeal that includes a request to suspend the execution of the ruling. 

 

Banking sources have stated that issuing any contradictory decision to the initial ruling does not mean the problem has been resolved. 

 

The issue is likely to recur with any bank at any time, as long as some judges are not convinced of the need to treat money transactions equally, either in cash and in dollars for deposits on the one hand and loans on the other, or by issuing bank checks for everyone.

Banking sources have also stressed the importance of the Banque Du Liban (BDL) issuing a circular related to transfers and withdrawals in the absence of a Capital Control law, which would be taken into account by the judiciary.

Banking sources have reiterated that they have been obliged to collect around $30 billion in debt owed to them by the private sector through checks and in Lebanese lira at a rate of 1,500 LBP to one US dollar and asked whether depositors would accept receiving their deposits in the same manner that banks have collected their loans. These loans are an essential part of the deposits.

In light of this reality, there is no retreat in the banks strike, and its repercussions have led some banks to suspend all operations on the Sayrafa platform, fearing that they will not be able to recover their dollars, as the BDL has informed the Association of Banks in Lebanon (ABL) that it will not be able to continue its Sayrafa operations with banks due to the declared strike. 

 

Banking sources considered that the Central Bank needed an excuse to stop the Sayrafa operations and blamed it on the banks strike.

The debate continues in the ABL regarding suing the Lebanese state. Still, there is a widespread belief within the association that such a lawsuit is futile and will not benefit depositors.

If there were seriousness on the part of the state in assuming its responsibility for the financial losses, it would have initiated a transitional program to restructure the Central Bank, a process that the monetary and credit law has stipulated.