BDL seeks middle ground in ongoing dispute over deposit recovery—the details

Report by Lea Fayad, English adaptation by Mariella Succar

Disputes between the Lebanese government and the banking sector continue over how to define financial losses and return deposits, while the central bank maintains a firm but flexible stance, according to Banque du Liban sources.

The central bank’s position is based on four main pillars:

First, cleaning up irregular claims by removing all noncompliant or unjustified items from banks’ accounts, including those related to past financial engineering and high interest rates.

Second, applying the hierarchy of claims to ensure banks bear responsibility and recapitalize themselves, even if their capital has been eroded since the crisis.

Third, classifying deposits into small, medium, and large categories to prioritize the protection of small depositors.

Fourth, sharing responsibility among the state, the central bank, and commercial banks for repaying deposits.

Banque du Liban believes the government has remained aligned with these principles, particularly after prime minister Nawaf Salam formed a committee to draft a new financial stability and deposit repayment law, viewed as part of the broader framework for restructuring the banking sector.