Lebanon’s banks tend to close completely in response to the “government’s procrastination”
Emergency “vibrations” in the financial and consumer markets
Sunday – 21 Rajab 1444 AH – February 12, 2023 AD Issue number [
16147]
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Lebanese in front of a closed branch of a bank in Beirut (Archyde.com)
Beirut: Ali Zeineddine
Hardly, the strike of the Lebanese banks receives little attention, following the horrors of nature and the shaking of homes in Lebanon several times this week took over the priorities, amid increasing fears and searching for the most effective means of prevention in the event of the worst.
Bankers hope, with the turnout for the new week, that the incentives for the announced strike will rise to the interest of the caretaker government and the contacts of its president, Najib Mikati, according to the unannounced promises during his meeting with a delegation from the Board of Directors of the Association of Banks, to seek with the references of the judicial authority to establish a flexible formula that takes into account the existing exceptional circumstances. In the country, and not subject to any “excess or arbitrariness” in deciding the claims of some depositors once morest their banks, and pending the issuance of the House of Representatives law establishing special controls on withdrawals and transfers (Capital Control), which will become the legal basis for these complaints.
According to the assurances of a senior banking official who spoke to Asharq Al-Awsat, and assuming that no progress has been achieved in translating government promises, it can be estimated that the banks’ reversal of their decision will harm their position as the nucleus of the financial sector, and their local and external reputation, which was mainly subjected to significant and intentional distortions over the years. Continuous collapses, since the fall of 2019. This may push it to a greater escalation that may affect the suspension of automatic teller machines, and any emergency tasks that were isolated from the general strike decision. Noting that the effectiveness of the strike is likely to rise from limited to unrest and tensions, with the approach of salary payment dates before the end of the month. Where the volume of business and internal tasks doubles to keep up with expenses and pump cash. And until satisfactory settlements are matured to ensure the justification of emergency exceptions that banks adopt in managing shrinking liquidity in pounds and dollars, Asharq Al-Awsat monitored a different atmosphere among citizens and consumer market traders, to the extent that many among them contented themselves with an artificial smile that covered the fear, cold and sadness they felt at the time. One. Indeed, some of them mocked the new bank strike, while they were imprisoned in the queues in front of the automatic teller machines.
Many employees in the public and private sectors and depositors in banks noted that the timing of the implementation of the bank strike, days away from the payment of salaries, added a fundamental reason for their indifference. As long as the ATMs are operational, they will cover the few remaining monthly withdrawals available.
The volume of cash exchanges through the “Sirfa” platform indicates a decline in total trading from levels ranging between 40 and 50 million dollars, to regarding 22 million dollars at the beginning of the week. Then to $10 and $8 million, respectively, in the first two days of the strike. However, these numbers do not reflect the volume of dollar sales in favor of individuals through banks and companies, given that the central bank that runs the platform records all buying and selling operations on it, including its own operations in which it buys dollars from specific money changers and money transfer companies, noting that the price of the dollar has also increased. on the platform, to become 43.6 thousand pounds.
In addition to the reasons why the banks’ strike did not have a wide impact, the institutions were actually in a state of semi-closure before the strike was announced, and their services are limited to funds pumping liquidity according to the system of monthly quotas for depositors and paying salaries to workers, especially regarding 400,000 public sector employees and retirees. As for the visits available to clients, they mostly include companies whose representatives are unable to complete their transactions through exchange machines, or individuals who require statements of their accounts to obtain travel visas, as well as those wishing to restructure their previously existing loans, by paying due installments or the full remaining amount; In order to benefit from the differences in the official exchange rates, which are currently equivalent to the lira, and despite its 10-fold increase starting from the beginning of this month, it is less than 25 percent of the market value of the dollar.
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