Banks in Lebanon will start an open-ended strike from Tuesday but will keep ATMs operating for basic services, the Lebanese Banks Association said on Monday, urging authorities to pass overdue measures to deal with a deep financial crisis.
The decision came after a meeting by the association to discuss judicial measures against banks that have snowballed since the onset of the crisis, and “their impacts on banking workflow and the rights of depositors,” it said in a statement.
It called on Lebanese authorities to pass a capital control law that would enshrine informal restrictions on withdrawals in hard currency and Lebanese pounds, as well as legislation to restructure the country’s troubled banks.
Lebanon’s financial system imploded in 2019 after decades of profligate spending, corruption and mismanagement by ruling elites, leaving most depositors unable to freely access their funds and throwing thousands into poverty.
The crisis has been left to fester.
In April 2022 the government reached a draft deal with the International Monetary Fund for a $3 billion bailout, but nearly a year later has failed to complete the steps required to clinch the accord, leading the IMF to note “very slow” progress.
Capital controls and a bank restructuring framework are among the IMF preconditions for the bailout.
The banks association also called for banking secrecy regulations to be abolished, including retroactively, which would allow lenders to share data with authorities and the judiciary for financial investigations.
Because capital controls have been imposed ad hoc, banks have faced lawsuits from customers seeking their deposits.
There have also been an array of allegations of financial misconduct, including that influential people and bank shareholders transferred money abroad during the crisis at a time when most people were unable to do so.
Last year, parliament amended strict banking secrecy regulations to allow more access for authorities including tax regulators and the judiciary. But bankers have said that the new law does not allow them to provide data that predates it.