The lawsuit appears to represent one of the first major challenges to restrictions Lebanese banks have begun applying to transfers and withdrawals as they grapple with a hard currency shortage and fears of capital flight.
THURSDAY 28, NOVEMBER 2019 BY KUDAKWASHE MUZORIWA
Oil trader IMMS has taken Lebanese bank BankMed to court in the US state of New York, accusing the lender of failing to return $1 billion of its deposits when requested, reported Reuters.
BankMed stated that the $1 billion deposit is a blocked deposit by instructions of IMMS maturing in about two years from now, adding that it had discovered ‘material breaches of contract and attempts by IMMS to direct funds due to BankMed overseas’ between 30 October and 12 November 2019.
Protests that have swept Lebanon since 17 October 2019 have put pressure on the country’s financial system, deepening the hard currency crunch and prompting commercial banks to put curbs on foreign currency withdrawals and nearly all transfers abroad.
BankMed said that it was terminating all of IMMS’s credit facilities due to the material adverse change in the economic condition of Lebanon and the Lebanese financial market on 12 November 2019.
In a court filing, IMMS said that it seeks remedies against defendant BankMed for BankMed’s brazen theft of more than $1 billion.
The Lebanese bank defended itself saying it remains committed to its high standards of banking, the protection of its customers’ interests and the application of Lebanese laws as well as practises as required under the current circumstances.
S&P Global Ratings downgraded BankMed’s rating further into junk territory, citing rising liquidity pressures due to faster deposit erosion. S&P’s long-term credit rating for BankMed is now CCC and the rating agency said it was vulnerable to further downgrades.
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