Dhe banks in Lebanon want to close for three days from Monday. The Association of Banks in Lebanon (ABL) said in a statement on Friday that the aim was to protest against the “repeated attacks on banks and in particular on bank employees”. She apologized to depositors “for any inconvenience or delay” that this closure may cause. The safety of banks, employees and customers is “of great importance”. The background is a dramatically increasing number of incidents in which desperate bank customers want to use force, sometimes at gunpoint, to force their assets to be handed over in cash. There were two hostage-takings on Wednesday and about half a dozen incidents were reported on Friday.
Ever since an unprecedented economic crisis swept through the country in autumn 2019, legions of Lebanese have had to watch their savings drain away. At that time, a pyramid scheme with which the central bank had kept the value of the Lebanese currency stable at an unnaturally high level collapsed. The private banks have imposed – actually illegal – capital controls so that customers no longer have access to the dollar deposits they had saved up before the crisis. You only get paid out a limited amount – in local currency and at a dubious, bad exchange rate. The value of the Lebanese pound has fallen dramatically and prices have skyrocketed.
The private banks have made a significant contribution to the current crisis. The central bank used them to procure foreign currency on credit. Investors were lured with returns well above market levels. Corrupt politicians, central bank officials made millions with dubious financial deals, and top managers also made good money and ignored all warnings. With the onset of the financial collapse, dollar balances in private banks were frozen. However, large depositors with good connections could quickly move billions of dollars out of the country.
