Banque du Liban Requires Banks to Secure Gradual Payment of Deposits in Foreign Currencies

Banque du Liban issued on Saturday a decision requiring banks operating in the country to exceptionally do what is necessary to secure the gradual payment of deposits in foreign currencies held in accounts opened after October 31, 2019, in accordance with several conditions and mechanisms.

The conditions included in the decision indicate that an account with a "check" trading transaction shall not benefit from the provisions of this decision, nor shall persons who, after October 31, 2019, transfer deposits from the Lebanese lira to foreign currencies, with an amount equal to or greater than $300,000, excluding amounts resulting from end-of-service compensation.

The Central Bank also stipulated that the account holders benefiting from this circular should not have paid, after the aforementioned date, in Lebanese pounds, the balances of loans granted to them in foreign currencies, equivalent to or exceeding $300,000.

The conditions included that the account holder submit a request to open a special branched account to transfer the equivalent of $4,350 or less according to the amounts available in the main account with the relevant bank in US dollars or any other foreign currency. If the account is joint or unified, benefit will only be made with a maximum amount is $1,800 annually.

The decision also stipulated that banking secrecy be lifted from the branched private accounts. This is for the benefit of the Bank of Lebanon and the Banking Control Commission, and the amount of $150 will be disbursed from the branched private accounts, paid in cash monthly to the account holder or via a transfer abroad or deposited in a new account.

The bank indicated that it will secure liquidity to meet the requirements of this decision equally from the liquidity of the bank in question and from the balance of mandatory investments in foreign currencies belonging to banks at the Central Bank of Lebanon, explaining that the decision will come into effect immediately upon its issuance for a period ending next June 30, subject to amendment or renewal.

It is worth noting that banks operating in Lebanon have stopped paying depositors’ deposits in foreign currencies since October 17, 2019 until today, with the exception of limited amounts as part of exceptional decisions issued by the Bank of Lebanon, most notably Resolution 151, which carries the same content as the decision issued today, but its implementation has ended.