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Beirut (AFP)
The Central Bank of Lebanon begins to review the conditions of Lebanese banks after a set deadline for them to increase their capital ends, as part of a plan to restructure the banking sector amid a serious economic crisis that is the worst, according to Monday’s statement. .
The requests from the Central Bank of Lebanon reflect the size of the crisis facing the banks, amid a severe liquidity crisis accumulated by excessive loans to the state for decades. Since the summer of 2019, banks have imposed strong restrictions on deposits, especially in dollars and transfers abroad.
In the summer 2020 circular, the central bank asked banks to increase their capital by twenty percent by the end of February. It was also required to create an offshore account free of any liabilities with the correspondent banks abroad, of no less than three percent of the total deposits in foreign currency.
Among the requests is also urging major depositors, who have transferred half a million dollars abroad since the summer of 2017, to return at least 15 percent to a special account that will be frozen for five years.
Once the deadline had expired, the Central Council of the Banque du Liban announced on Monday “an agreement to establish a roadmap with implementation deadlines, through which the Banque du Liban will resort to taking appropriate measures related to the implementation of the provisions of Circular No. 154. “
According to a Banque du Liban official, the roadmap stipulates that from the end of February, the Banking Control Commission will prepare reports on banking conditions and send them to the Governor of the Banque du Liban, Riad Salameh.
As a result, the Central Council will examine these reports and refer the banks that did not comply with the circular to the Supreme Banking Authority for the appropriate decision against them.
In an interview he gave at the end of last year with Al-Arabiya TV, Salameh clarified that the shares of banks that do not commit to increase their capital and the specified liquidity ratio “will become the property of the central bank”, and therefore therefore there will be a “restructuring of the banking sector.
He explained that this does not mean the bankruptcy of the banks that did not comply, since the Central Bank will “reorganize and sell them.”
To ensure compliance with BDL’s plan, media reports indicated that at least two large banks deliberately sold their overseas branches to secure the capital increase.
The restructuring of the banks was one of the main points of the austerity plan that the government launched before its resignation after the explosion in Beirut, and on the basis of which it held several negotiating sessions with the International Monetary Fund. The negotiations were subsequently suspended amid disagreements among Lebanese negotiators on the number of losses and priorities.
The government hoped to halve the number of 49 commercial banks.
Since the summer of 2019, Lebanon has witnessed its worst economic crisis, which has led to the local currency losing more than eighty percent of its value against the dollar, exacerbating inflation rates and causing tens of thousands of people to lose their jobs and sources of income. .
Analysts and observers accuse political leaders and officials of transferring huge sums of money from their accounts abroad, after unprecedented popular demonstrations that began in October 2019 against the political class, despite strict restrictions that prevent financial transfers to the Exterior.
Several political parties blame Salameh for the collapse of the lira and harshly criticize the monetary policies he adopted, considering that they accumulate debts. However, Salameh repeatedly defended himself, saying that the Central Bank “financed the state but did not disburse the money.”
© 2021 AFP
