Lebanese banks close doors as protesters demand release of detainees

Special Lebanese banks close doors as protesters demand release of detainees
A man walks past a closed Blom Bank branch in Sidon, on the first day of a three-day closure over security concerns, in Sidon, southern Lebanon September 19, 2022. (Reuters)
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Updated 19 September 2022

Lebanese banks close doors as protesters demand release of detainees

Lebanese banks close doors as protesters demand release of detainees
  • IMF begins talks in Beirut to monitor stalled rescue plan

BEIRUT: Lebanese banks began a three-day closure on Monday following a decision by the Association of Banks aimed at preventing break-ins and holdups by depositors.

It comes after a series of high-profile incidents in bank branches, with depositors attempting to withdraw US dollar savings that have been frozen for three years.

Caretaker Interior Minister Bassam Mawlawi described the bank break-ins in Beirut and other regions as “organized.” The Association of Banks demanded that “necessary measures be taken” in order to ensure the safety of employees and customers, and to preserve depositors’ rights.

Some bank central departments remained administratively functional on Monday, while the central bank’s Sayrafa platform was unaffected by the strike. The black market US dollar exchange rate failed to rise as significantly as expected as a result of the political and security turmoil in the country, with the rate standing at 38,350 Lebanese pounds.

When branches reopen, a number of banks are planning strict self-protection measures by subjecting customers to inspections and only receiving those who have scheduled appointments.

President of the Lebanese Depositors Association Hassan Moghnieh warned that “the strike will not resolve the ongoing crisis. When work resumes next Thursday, banks might witness a new wave of holdups, which means that the solution resides elsewhere.”

On Monday morning, a number of activists tried to break into the Justice Palace in Beirut in protest against the detention of activists who took part in bank holdups. The army prevented the families and activists from entering the palace.

Screams were heard as protesters demanded the release of Mohammed Rustom and Abdul Rahman Zakaria, who were detained for breaking into Blom Bank to support depositor Sali Hafiz, who had earlier used a plastic gun to demand her deposit to treat her sick sister.

Political analyst Ali Hamadeh said: “The anger of the Lebanese citizens is great and everyone is talking about the need for a revolution that turns the tables on the whole ruling class.”

The recent developments in the country — the rise of the dollar exchange rate, the absence of a cap on the rise of the dollar on the black market and fears of a presidential vacuum — have left the Lebanese public deeply concerned.

Groups also protested worsening living conditions, including electricity shortages, by blocking streets in Beirut and other regions with garbage bins, as well as burning car tires.

Economic analyst Violette Balaa said: “As long as the political class will keep turning a deaf ear to the depositors’ and citizens’ sufferings, no one can guarantee that some beneficiaries won’t take advantage of the security situation that became delicate as a result of the negative shocks of the social and living reality.”

Balaa warned that “spinning around in circles will not benefit either political class, banks or depositors.”

On Monday, an IMF delegation arrived in Beirut and immediately began talks with Minister of Finance Youssef Khalil, bank managers and a group of experts. The delegation will also meet with a number of political officials, bankers and economic bodies.

The IMF delegation is headed by Mission Chief for Lebanon Ernesto Ramirez-Rigo.

He described his mission as “highly precise,” saying that its main objective is “to learn about the actions taken by Lebanon under the senior staff-level agreement reached with the IMF.

“Its second objective is to urge Lebanese officials to continue implementing the terms of the agreement in order to reach future understandings.”

According to financial observers, none of the items of the agreement reached with the IMF last April have been implemented. The president froze a law approved by Parliament related to bank secrecy.

Moreover, Parliament has yet to approve the 2022 budget, the capital control law and the bank reconstruction law included in the stalled recovery and rescue plan.