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26 January 2020
HALAL ECONOMY

Banque du Liban rules out ‘haircut’ on deposits

The heavily indebted country's crisis has shaken confidence in banks and raised concerns over its ability to repay one of the world's highest levels of public debt

Lebanese banks have been imposing informal controls on access to cash and transfers abroad since October 2019/Bloomberg

by Kudakwashe Muzoriwa

Banque du Liban (BdL) said that there will be no ‘haircut’ on deposits at banks due to the country's financial crisis, responding to concerns voiced by a prominent Emirati billionaire about risks to foreign investments in Lebanon.

Emirati businessman Khalaf Ahmad al-Habtoor, founder of the Al Habtoor Group that has two hotels in Beirut, posted a video of himself on his official Twitter account asking Lebanon's central bank governor if there was any risk to dollar deposits of foreign investors and whether there could be any such haircut.

In a tweet addressed to Habtoor, Riad Salameh, the Governor of BdL, said that the declared policy of the Lebanese central bank is not to bankrupt any bank thus preserving the depositors, adding that the law in Lebanon doesn't allow haircut.

“BdL is providing the liquidity needed by banks in both Lebanese pound and dollars, but under one condition that the dollars lent by BDL won't be transferred abroad,” said Salameh.

Seeking to prevent capital flight as hard currency inflows slowed and anti-government protests erupted, banks have been imposing informal controls on access to cash and transfers abroad since October 2019.

Reuters reported that a new government was formed this week, and its main task is to tackle the dire financial crisis that has seen the Lebanese pound weaken against the dollar.

Habtoor had asked Salameh for clarity for Arab investors concerned about the crisis and those thinking of transferring funds to Lebanon to try to ‘help the brotherly Lebanese’.


RELATED STORIES: Riad Salameh Banque du Liban Al Habtoor Group Khalaf Ahmad al-Habtoor

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