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A senior French official said it could be difficult for banks in Lebanon to adhere to the principle that depositors should not lose any of their deposits, according to the minutes of a meeting in which France identified steps to help the paralyzed banking sector.
The remarks came during talks in Paris on September 10 between senior French officials and a delegation from the Lebanese Association of Banks.
Reuters saw a copy of the confidential minutes of the meeting.
France has taken the lead in international efforts to pressure politicians holding their positions in Lebanon to implement the reforms necessary to attract aid and alleviate a crisis that has paralyzed the banking sector and prevented depositors from obtaining most of their credit. money.
“While it is a matter of principle for the Lebanese Association of Banks that depositors should not suffer losses, it may be difficult to defend this to the end. But it is a matter of negotiation,” said Pierre Duquin, envoy of French President Emmanuel Macron to coordinate international support to Lebanon.
The Lebanese Central Bank and the commercial bank bankers are trying to avoid a “reduction in the value of deposits” or an official reduction of the balances held in deposit accounts.
But depositors with dollar accounts in Lebanon say they have already lost money because they cannot withdraw the money or because they can only do so by converting it into Lebanese pounds at lower market rates.
The value of the Lebanese pound, which has been pegged to the dollar for more than 20 years, collapsed during the financial crisis.
The French Foreign Ministry has not yet issued a comment.
A senior Lebanese banker who took part in the talks told Reuters that during his meetings with French officials addressing the president’s initiative, they felt they were supporting the boom in the banking sector.
A French diplomatic source said the talks were part of efforts to implement the economic roadmap for Lebanon.
In addition to the statements made by Duquesne regarding deposits, he also addressed other required measures, including the rapid implementation of capital restrictions and the merger of banks in a country that has 64 banks controlled by 32 groups.
On the restructuring of the external and internal debts of Mount Lebanon, Duquesne said that a series of measures should be taken. He added that “there is no magic formula.”
The minutes of the meeting showed that representatives of the Lebanese Association of Banks, including the Association’s president, Salim Sfeir, said that the banks were ready to join “collective efforts” to resolve the crisis and identified proposals that included support for the establishment of a fund to mobilize state assets.
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