HOLD-UPS FORCE LEBANESE BANKS TO CLOSE ‘INDEFINITELY’

Fri 07 October 2022:

An unprecedented wave of hold-ups by frustrated depositors seeking access to their savings, Lebanon’s banks have decided to close their doors to clients indefinitely.

According to the two sources, banks will continue urgent operations for clients and back-office services for businesses, but front-office services will remain suspended.

Banks closed for about a week in similar circumstances last month, but reopened at the beginning of October to allow employees to withdraw their paychecks.

LEBANON BANK STAFF HELD HOSTAGE BY ARMED MAN DEMANDING SAVINGS

In mid-September, a young Lebanese woman, Sali Hafiz, was lauded as a national hero after forcing staff at a BLOM Bank branch in Beirut to give her thousands of dollars from her own account by waving a replica gun in order to fund her sister’s cancer treatment in hospital. She told Al Jazeera that her actions were a response to the bank “stealing” her money.

Although she was not the first depositor to hold up a bank to demand access to their savings, her case triggered a snowball effect with multiple hold-ups taking place since then as the population grows more frustrated over strict measures preventing depositors from accessing most of their dollar savings.

Just last week armed depositors stormed three commercial banks in different locations across the country.

A politician, Cynthia Zarazir, entered a bank on Wednesday demanding access to her savings, although she was unarmed.

WOMAN HOLDS UP LEBANON BANK FOR $13,000 OF HER OWN MONEY

Banks started imposing such informal capital controls following an economic downturn which began in 2019. Since then, the local currency has lost about 90 percent of its value, the country’s gross domestic product has contracted by more than 40 percent and inflation remains in the triple digits.

The restrictions mean that depositors are only allowed to withdraw a limited amount of money per day, and most withdrawals of foreign currency have to be carried out at an exchange rate unfavourable to depositors, meaning that depositors will lose almost 80 percent of the value of the money in their savings if they withdraw it.

According to the World Bank, Lebanon’s economic crisis is the worst the world has seen since the 1850s. According to the International Monetary Fund, the government has been slow to implement much-needed reforms, exacerbating the country’s economic meltdown (IMF).

These reforms are critical to unlocking an IMF bailout to help alleviate the crisis, which economists blame on decades of wasteful spending and corruption.

Lebanon’s bank association has previously urged the government to enact formal capital controls to replace the informal controls implemented by banks in 2019, but parliament has repeatedly failed to pass the legislation.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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