Germany’s Commerzbank AG has suspended its correspondent banking relations with at least three Lebanese financial institutions citing a “lack of profitability,” according to unnamed banking sources that spoke with Lebanese daily L’Orient-Le Jour.

But despite the claims made by the German bank, experts believe this is a “pretext” and say the decision is more likely a result of Lebanon’s possible grey-listing by the Financial Action Task Force (FATF) over money laundering concerns and the issuance of a red notice by Interpol against Central Bank Governor Riad Salameh.

Speaking to Al Akhbar, monetary advisor Ghassan Shammas also revealed that banks in the Netherlands, Belgium, Sweden, and the rest of the Scandinavian countries have adopted a “de-risking policy to end or reduce their dealings with Lebanese commercial banks.”

While the “de-risking” policy is usually adopted as a precautionary measure by banks over poor profitability or money laundering concerns, fears are mounting that this could snowball into a complete severance of relations by western banks given the complete inaction of Lebanon’s political class to address the dire economic crisis.

Correspondent banking relationships allow institutions in one country to domicile accounts in another country with a different currency so that transfers can be made from one country to another.

If these are severed, Lebanese depositors will find it difficult, if not impossible, to make or receive transfers from all European countries.

Since 2019, Lebanon has been experiencing what the World Bank describes as the worst economic crisis in 150 years.

At the center of this crisis stands Salameh, under investigation in Lebanon and at least five European countries for embezzling hundreds of millions of dollars in public funds and laundering them abroad.

France and Germany have issued arrest warrants against Salameh for corruption, forgery, money laundering, and embezzlement. Despite this, on Tuesday, Lebanon’s Justice Minister Henry El-Khoury said that Beirut “will not hand over Salameh.”

Salameh has denied any wrongdoing and is expected to file an appeal against the Interpol red notice.

Meanwhile, French prosecutors summoned Salameh’s brother, Raja Salameh, and assistant, Marianne Hoayek, for a hearing in Paris on 31 May and 13 June, respectively.

Salameh has been facing growing calls to resign before his term expiry in July. The 72-year-old governor, who has headed the central bank since 1993, said earlier this year that he does not seek a new term.

However, according  to sources that spoke with Al-Joumhouria, caretaker Prime Minister Najib Mikati has continued to protect Salameh and is pushing against his immediate dismissal, referring to such a move as “populist.”

For his part, the embattled central bank chief has reportedly contacted Mikati to tell him he refuses to hand over power and resign voluntarily before his term ends.

Several Lebanese commercial banks have been charged with money laundering for their illicit dealings with Salameh. The banks are also responsible for imposing restrictions on withdrawals that were never formalized by law, effectively blocking depositors from accessing their savings.