A senior banking official has warned that Lebanon will likely plunge into a dire LBP liquidity crisis, amid the current unusual escalation between banks and some judges that has involved the freezing and seizure of assets belonging to some banks.
This might push banks’ administrations to “hold emergency meetings amid calls for escalating the confrontation, all the way to taking a decision to shut down collectively as a warning move, and demanding that the government and the central bank intervene in an urgent manner to address the growing crises in a fair way,” the official told Ashraq al-Awsat newspaper in remarks published Thursday.
The decision to seize Fransabank’s assets has meanwhile alarmed citizens, especially amid reports that the salaries of the public and private sectors would be affected. A judicial source, however, has played down the impact of the move on wages, noting that the judiciary will seek to balance between “protecting the rights of citizens and depositors” and “preserving the banking sector.”
The judiciary will make sure that these measures “won’t be exploited in political conflicts,” the source added.
The source also reassured that “the court of enforcement has kept cash registers and ATMs open, so that people can withdraw their money and salaries,” noting that only Fransabank’s “main safes have been sealed with red wax to prevent the bank from disposing of what’s in them.”
A Fransabank source meanwhile told Asharq al-Awsat that the ruling “will have very negative repercussions,” warning that it will “deprive depositors from the ability to withdraw portions of their money” and will also “prevent state employees from getting paid their salaries.”
Citizens’ “problem is not with Fransabank anymore, but rather with the court that issued this ruling and rushed to implement it without caring for its disastrous consequences,” the source added.