(Photo credit: Reuters)
The Association of Banks in Lebanon (ABL) issued a statement on 8 March claiming “no liquidity” to pay back depositors who have been locked out of their savings since 2019.
In a letter signed by ABL Secretary General Fadi Khalaf, which served as the introduction to their monthly report, he says ABL deposits with the Central Bank of Lebanon amounted to approximately $86.6 billion in mid-February, while deposits with foreign correspondent banks stood at a net negative of $204 million as of 31 January.
“These numbers show without a doubt that the banks have no liquidity,” Khalaf says.
His letter claims that commercial banks have lost liquidity due to the payment of around $28 billion to debtors since 2019, saying that “today’s rich are yesterday’s creditors.”
Since the onset of Lebanon’s manufactured economic collapse of 2019, commercial banks unilaterally imposed restrictions on withdrawals in US dollars and Lebanese liras that were never formalized by law.
This situation, coupled with the banks’ role in creating the crisis due to their illicit dealings with the Central Bank and its chief, Riad Salameh, has led depositors to seek access to their funds through lawsuits and often by force.
Lebanese courts have charged Salameh with money laundering, embezzlement, and illicit enrichment. He faces similar charges in at least five European countries.
Over the past several months, the ABL has been staging ‘indefinite‘ strikes to pressure authorities to step in and offer them protection from enraged depositors and ongoing criminal investigations.
This strategy bore fruit last month when caretaker Prime Minister Najib Mikati ordered security forces to ignore judicial orders against commercial banks charged with money laundering.
Lebanon’s dire economic downfall, created by decades of corruption and mismanagement by the country’s financial elite, has plunged over 80 percent of the population below the poverty line and slashed nearly 100 percent of the Lebanese lira’s value.
The country also struggles with a complete lack of government-provided electricity, exacerbated by Washington’s refusal to grant regional nations sanctions waivers to implement an energy-sharing plan with Egypt, Jordan, and Syria.