Distraught Lebanese depositors fight for their life savings

  • Lebanon now in third year of deep economic crisis
  • The ruling elite has yet to agree on a recovery plan
  • For fear of savings, more depositors go to court
  • Lawyers say that the poorest depositors are the most affected by the crisis

BEIRUT, March 24 (Reuters) – When a Lebanese bank told Aref Yassin it had closed $20 million worth of accounts belonging to the professional union he heads and wrote a check for the balance worth a fifth of face value , took up the matter. to the courts.

The money, saved from engineering subscriptions and deposited at Fransabank, went towards health care and union-covered pensions for some 100,000 people now facing losing a livelihood in a country in the third year of a crisis. economic.

“Recovering union money stuck in the banks has become a matter of life and death for engineers,” Yassin said, adding that some beneficiaries needed cash for life-saving treatment.

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Fransabank said banking secrecy rules meant the bank could not reveal information about a customer.

Lebanon’s ruling elite has so far failed to come up with a recovery plan to address Lebanon’s financial collapse that erupted in late 2019, with the crisis now increasingly playing out in the courts between depositors and banks.

Fearing for their life savings, more account holders are suing banks in hopes of getting their cash back. And, in response, more banks have been closing accounts and writing checks for the balance without consulting customers, attorneys representing depositors say.

Ruling politicians have yet to agree on how to deal with the huge losses the financial system suffered as the economy collapsed under a mountain of debt accumulated by decades of corruption, sectarian patronage and mismanagement.

Nor have they passed a capital control law to deal with what the World Bank calls one of the world’s worst financial collapses on record. Such a law would help ensure savers are treated fairly and prevent funds from bleeding out of the country.

More than $100 billion remains trapped in Lebanese banks that lent to the state, and court battles to access the cash still left in the banking system are heating up.

In one of the most high-profile cases, a London court ruled in favor of a saver seeking $4 million deposited with Bank Audi and its peer SGBL.

‘DON’T WANT TO PAY’

The banks, which have called for a capital control law, say the London ruling means there is now less cash left for less well-off depositors who cannot afford to take such action.

But small depositors have already been the hardest hit, said Fouad Debs, co-founder of the Depositors’ Union, which groups lawyers and activists.

The union has filed around 300 lawsuits on behalf of savers in Lebanon and abroad since 2019. They include cases to request fund transfers and reopen closed accounts. But only a dozen cases had been concluded in favor of depositors, he said.

“They’re just closing people’s accounts because they don’t want to pay people back, and they’re doing it more and more because they’ve seen no regulatory body oppose them,” Debs said.

The government is showing growing concern over rulings supporting depositors and other court orders freezing the assets of some of Lebanon’s largest banks while a judge investigates their dealings with the central bank.

“We should not celebrate the bank freezes and actions that are happening,” Prime Minister Najib Mikati said, adding that “there will be nothing left” for small depositors if rich depositors are given their cash back.

Many savers accuse Lebanon’s ruling elite of doing more to protect the wealthy and the banks, some of which have top politicians as shareholders, than small account holders.

“Elite people are always transferring money,” said Dana Trometer, a 48-year-old filmmaker living in Britain, adding that “normal people” were not getting the same treatment.

‘THAT’S NOT FAIR’

While most savers cannot access their cash, the lack of a capital control law means there is no legal reason to stop transfers. A source with knowledge of the matter said that some banks had transferred money for politicians and their allies.

The Lebanese Banking Association did not immediately respond to a request for comment. Banks have said they have tried to treat all depositors fairly and have limited most transfers to essential needs, such as education and health care.

Trometer sued two years ago in Lebanon to access his mother’s trapped retirement savings, to no avail.

“It’s not fair,” Trometer said, adding that her mother “can’t even get a penny out of the bank to help her every day, just buying everyday essentials.”

Lawyer Ali Zbeeb said the accelerated rate of account closures by banks may have been caused by the London ruling in favor of British businessman Vatche Manoukian, whom he advised.

“So banks may be trying to avoid a similar situation by pre-emptively closing accounts,” Zbeeb said.

Debs of the Depositors’ Union said more than 50 British savers had been contacted since the ruling because their accounts had been unilaterally closed or they feared closure.

Most had accounts with Blom Bank and Bank Audi, he said.

Blom Bank’s legal counsel said the bank had closed some accounts of Lebanese and foreign nationals during the crisis and said the contract signed by clients gave the bank the right to unilaterally close accounts without notice.

Some of the closed accounts were held by British citizens or residents and some had been closed since the London ruling, the bank said.

Bank Audi, which did not comment for this report, said after the London ruling that it was asking UK residents to apply the terms applicable to anyone opening a new account, meaning no international transfers or withdrawals. of cash. If this was not accepted, the bank said they would close the account. Read more

Karim Daher, head of the Depositors’ Rights Commission at the Beirut Bar Association, said he had received regular calls from distraught savers struggling to access just part of their cash.

“These people have set aside money for retirement, to send kids to school and college,” he said. “It’s a catastrophic situation.”

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Information from Timur Azhari; Edited by Tom Perry and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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