Lebanese banks will act together for the first time to take emergency measures they call temporary, as they plan to open while the country remains paralysed due to monthlong protests and the failure of politicians to agree on a new government, reported Bloomberg.
The Association of Banks in Lebanon stated that the lenders agreed to lift a restriction on new money coming from abroad and set a withdrawal limit of $1,000 a week for accounts denominated in foreign currency.
The banks also said that the transfer of funds outside the country will be allowed strictly for urgent personal matters and asked clients to use their credit cards to meet their needs.
The association said that the measures—which will go into effect when lenders reopen for business—do not amount to capital controls and are being rolled out in coordination with the central bank.
Lebanese banks have been closed for much of the past month as anti-government protests erupted in the country, their employees went on strike last week, urging management to provide them with more security in the face of angry clients who sought to withdraw money fearing a prolonged period of disruption.
The measures have limited imports, with suppliers of fuel and medical products warning of shortages because of a lack of foreign exchange, a situation that forced them to buy greenback at money changers that were pricing them higher than the official fixed exchange rate.
Salameh also asked banks to raise their capital by 20 per cent by next June 2020 and refrain from distributing dividends for 2019 to boost their liquidity and prepare for possible credit downgrades.
S&P Global Ratings downgraded three top banks in Lebanon last week, warning that the country’s economic crisis is draining liquidity from lenders.
S&P said it would further lower the ratings should there be additional pressure on banks’ liquidity positions or if the banks impose further restrictions on specific transfers and operations.
The anti-government forced Prime Minister Saad Hariri to resign last month and President Michel Aoun is yet to set a date for parliamentary talks to name a new premier. Major political parties nominated a wealthy businessman to lead the cabinet but he withdrew his candidacy after a backlash from protesters who are seeking a government of experts to lead the country out of the crisis.