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Lebanon banks agree to ease some curbs on cash-starved depositors

Banks have imposed strict restrictions on transfers and withdrawals [AFP]

Date of publication: 10 March, 2020

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Banks have agreed to loosen some restrictions on depositors, but no mention was made of easing caps on withdrawals from dollar accounts.
Lebanese banks have agreed to lift certain restrictions imposed last year to stem a crippling liquidity crisis, the National News Agency said on Tuesday.

Lebanon is grappling with its worst economic crisis in decades, as well as widespread public protests against the ruling political class since October.

Since September, banks have increasingly been imposing limits on withdrawals of both dollars and Lebanese pounds, as well as transfers abroad.

At a meeting between prosecutors and bank representatives on Tuesday, both sides agreed to new rules, NNA said.

These include lenders allowing depositors to withdraw up to 25 million Lebanese pounds a month (around $16,500 under the official exchange rate).

Other measures include allowing transfers abroad in hard currency for education fees, medical bills, tax purposes, "and everything else necessary", NNA said.

Banks would not be allowed to withhold any part of money freshly transferred into a Lebanese account.

There was, however, no mention of an easing of caps on withdrawals from dollar accounts, which have been squeezed down to just $100 a week at some banks. 

Read more: Lebanese struggle to cope with country's biting crisis

A judicial source said discussions were ongoing with the central bank over relaxing those limits. 

Last week, a prosecutor attempted to impose an asset freeze on lenders in an apparent bid to pressure them, but that order was suspended within hours.

Earlier in the week, the prosecutor separately called in 15 banks over an alleged more than 2 billion dollars in capital flight late last year.

Lebanon is facing its worst economic crisis since its 1975-1990 civil war.

The value of the Lebanese pound has plummeted by more than a third on the black market, prices have risen, and many businesses have been forced to close.

The Mediterranean country, one of the most indebted in the world, this weekend announced its first default on a $1.2 billion Eurobond that matured on March 9.

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