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10 November 2019
ECONOMY

Lebanon tries to calm depositors after curbs on hard-currency withdrawals

Lebanon has been pitched deeper into turmoil since 17 October by a wave of rallies against the ruling elite that led Prime Minister Saad al-Hariri to resign on 29 October 2019.

BLOOMBERG/SIMA DIAB


The Chairman Association of Banks in Lebanon said that bank deposits are safe and there is no need to panic, in a bid to calm nerves about restrictions on some withdrawals imposed after nationwide protests, according local newswire, National News Agency.

Salim Sfeir, the Chairman of the Association of Banks in Lebanon, said, “Depositors’ money is being preserved. What is happening is not an issue related to solvency and therefore there is no need for panic.”

Sfeir said that depositors should calm down and withdraw enough to meet their needs, not everything they have.

Lebanese lenders reopening a week ago and since then they have been seeking to stave off capital flight by blocking most transfers abroad and imposing curbs on hard-currency withdrawals, though the central bank has announced no formal capital controls.

Sfeir said that he was commissioned, alongside the Ministers of Finance and Economy and the Banque du Liban Governor, to follow-up on the monetary and banking situation as well as to issue explanatory statements to prevent any confusion or incorrect news whenever the need arises.

Sfeir spoke after a meeting with Lebanese President Michel Aoun, the Ministers of Finance and Economy as well as the central bank governor and other officials over the economic situation.

Last week, the World Bank has reiterated that it stood ready to support a new Lebanese government, warning the country had no time to waste to tackle an emerging economic crisis worsening by the day.

Moody’s downgraded the local-currency deposit ratings of Bank Audi, BLOM Bank and Byblos Bank to Caa2 from Caa1. The three banks’ foreign-currency deposit ratings were also downgraded to Caa3 from Caa1 and the rating agency cited constrained sovereign support for such deposits.

Similarly, Fitch Ratings downgraded Lebanon’s Bank Audi and Byblos Bank due to the impact of rising political tensions following weeks of nationwide protests, triggered in part by a currency crisis and struggling economy.

Fitch said that Lebanon’s ability to support banks cannot be relied on given the low sovereign rating and a further downgrade to the credit rating could lead to similar moves on the banks.


RELATED STORIES: PRESIDENT MICHEL AOUN BYBLOS BANK BLOM BANK BANK AUDI LEBANESE BANKS ASSOCIATION BANQUE DU LIBAN


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