Bank Association Secretary-General Warns of Repeated Mistakes

The Secretary-General of the Association of Banks in Lebanon confirmed that the bank reform law is heading toward a clear determination of the fate of deposits, emphasizing the importance of identifying sources of funding and implementation mechanisms to avoid the crisis evolving into a new setback within the banking sector. He explained that applying the current law could lead to the liquidation of a large number of banks, which hold over 550,000 accounts and $29 billion in customer deposits, noting that the Deposit Guarantee Fund may not be able to cover these deposits in the event of liquidation. He also warned that a lengthy and complex liquidation process could delay depositors' recovery of a substantial part of their rights, considering that any plan for deposit repayment must be based on real and transparent resources, and that the available liquidity of the state and the Central Bank must be taken into account. He stressed that banks should not be burdened with excessive costs that could impair their ability to provide services and restore trust. Additionally, he highlighted the importance of having realistic and executable timelines for deposit repayment, ensuring that loss calculations are done accurately and transparently to avoid unfairly burdening depositors and banks. He called for a clear definition of the contributions of the Central Bank and the governmental resources used, confirming that true solutions depend on the presence of real liquidity sources, and that any plans should balance financial justice, sector stability, and the overall economic system.

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