– Experts called on the Lebanese authorities on Friday to advance a recovery plan that would preserve the rights of depositors in Lebanese commercial banks to restore confidence in the ailing banking sector.
“The government has issued debt instruments to borrow money from depositors through central and commercial banks. Therefore, as the representative of the state, the government must hold productive discussions with creditors to reach a fair and constitutional,” said the former deputy governor of the Central Bank, Mohammed. Baassiri was speaking on the sidelines of the 2022 Beirut Economic Forum which opened in the capital city on Thursday.
The forum, organized by the Union of Arab Banks (UAB) in Beirut, focuses on sharing local experiences in economic reforms, in part helping Lebanon secure financial support from the International Monetary Fund (IMF) and discussing ways to find a recovery. adequate. plan to the economic crisis in Lebanon.
The plan stated that small depositors would be protected “to the greatest extent possible” at every viable bank, prompting depositors and their advocacy groups to question clarity and feasibility.
In addition, the plan would cancel “a large part” of the central bank’s foreign currency obligations to commercial banks, with non-viable banks due to be dissolved in November.
Lebanon’s 14 largest commercial banks, which account for 83 percent of the country’s total assets, will be audited, and viable banks will be recapitalized with “significant contributions” from bank shareholders and large depositors.
Although it was already launched by the government earlier this year, the plan has yet to be implemented due to the political deadlock in the country.
Samir Hammoud, a banking consultant and former chairman of the Lebanese Banking Control Commission, said it is a priority to protect all depositors, including those who have spent their lives abroad to save money in their homeland.
He said depositors should be able to receive their money in the same deposit currency.
Hammoud suggested using some of the banks’ assets to recreate the banking sector with new capital, governance and liquidity in line with the standards of BASEL, a global standard-setter for the prudential regulation of banks, which would restore IMF confidence, rating agencies, and audit firms.
Hammoud also stressed the need for Lebanon to boost its partnership with Arab countries to restore confidence in their banks.
Baassiri stressed the need to elect a new president and form a functional cabinet committed to immediate reforms to restore confidence in the banking sector, an uncomfortable but necessary task.
Osama Ahmed Ben Saleh Bukhari, head of the Banking Commission of the International Chamber of Commerce, said depositors are not responsible for the failed policies adopted by successive governments.
He proposed using digital currency to partly offset lost deposits instead of printing money.
“Part of the deposits can be returned electronically, which would reduce the burden on the system,” he said.
Lebanon’s unprecedented financial crisis forced banks to restrict the withdrawal of deposits, placing a heavy burden on people by depriving them of their savings. ■