Bank disruptions are increasing in Lebanon as depositors demand their own money

Bank disruptions are increasing in Lebanon as depositors demand their own money

BEIRUT (Reuters) – Depositors suspended five Lebanese banks seeking their funds frozen in the banking system on Friday, in a mounting wave of defaults this week, fueled by frustration over an internal financial meltdown with no end in sight.

Seven banks have been suspended since Wednesday in Lebanon, as commercial banks have deprived most depositors of their savings since an economic crisis gripped three years ago, leaving many residents unable to pay basic funds.

The bank told Reuters that a gunman named Abed Sobra entered the BLOM Bank in the new Tariq neighborhood of the capital on Friday morning, demanding his deposit.

Still locked up in the branch hours later, he told Reuters by phone that he had handed his rifle over to security forces and only wanted his money.

“I’ll stay here three, four, five days – I won’t move until I get my deposit,” he said.

Supra said he turned down an offer from the bank to take part of his $300,000 in savings with a massive devaluation of the local Lebanese currency.

“I deposited money in dollars, I want to return it in dollars,” he said.

Supra was greeted by a large crowd of people gathered outside, including Bassam Sheikh Hussein, who made the first delay in August to get his own deposits from his bank, which dropped charges against him.

“We will continue to see this happen as long as people have money inside. What do you want them to do? They have no other solution,” said Hussain, who received about $30,000 of his $200,000 in savings.

Banks are ‘worthy of my shoes’

Next week, the Association of Banks in Lebanon announced a three-day closure due to escalating security concerns, and called on the government to issue the necessary laws to deal with the crisis.

The authorities have been slow to pass reforms that would give them access to $3 billion from the International Monetary Fund to ease the crisis.

Among the pending laws is the Capital Controls Act, which is still under discussion by Parliament. In his absence, banks imposed unilateral restrictions on most depositors, allowing them to redeem limited amounts each week in US dollars or Lebanese pounds.

Withdrawals in Lebanese pounds are declining, as the pound has lost more than 95% of its value since 2019, and headed toward a new low of around 38,000 to the dollar this week.

Banks say they allow exceptional withdrawals for humanitarian cases, including health care payments, but depositors say the banks have not kept their word.

In the first case on Friday, a man managed to recover part of his money from the Ghazieh branch of Byblos Bank. (BYB.BY) The source said before his arrest, adding that the weapon in his possession was believed to be a toy.

Byblos Bank could not be reached for comment.

A bank employee said that in another incident, a man with a cartridge pistol entered a branch of an LGB bank in the Ramlet al-Baida area of ​​Beirut, seeking to withdraw savings estimated at $50,000.

Then, Mohamed Moussaoui threatened the Banque Libano-Française with a fake gun and managed to get $20,000 in cash from his account, he said over the phone.

“This banking system is deceiving us and it deserves my shoes,” he told Reuters he would hide.

BLF Bank told Reuters that the incident “last five minutes” and no employee was injured.

An industry source told Reuters that the fifth incident on Friday afternoon saw a man shoot inside a branch of BankMed as he sought to access his savings.

The source said that the man was a member of the Lebanese security forces, and there were no immediate reports of injuries.

Friday’s events came on the heels of two other incidents in the capital Beirut and in the town of Aley on Wednesday in which depositors were able to forcibly access part of their money using toy pistols mistakenly believed to be real weapons.

The Lebanese Banks Association urged authorities on Thursday to hold accountable those involved in “verbal and physical attacks” on banks and said the lenders themselves would not be lenient.

(Reporting: Taymour Azhari, Laila Bassam and Issam Abdullah. Written by Maya Jebeli. Editing by Mark Heinrich, William Maclean and Toby Chopra

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