New circular from Lebanon's Central Bank sparks controversy over bank fees

The Central Bank of Lebanon issued a circular Tuesday, which "prohibits banks from charging any new fees on deposit accounts unless they were imposed before the end of October 2019."

This article was originally published in and translated from Lebanese newspaper Nidaa Al-Watan.

It also requested banks to "prepare a list containing accurate and documented information about the actual cost of accounts incurred by the customer, how they are calculated, and the mechanism for their collection, with no fees imposed that are not authorized in the list."

The bank explained that the "Banking Control Commission will oversee the implementation of the circular and may impose administrative penalties on non-compliant banks."

However, well-informed sources have confirmed that "banks received the circular with a lot of dissatisfaction, but they are somewhat reassured that the Banking Control Commission may not be too strict in its enforcement, as some members of the commission are in collusion with the banks and serve their interests."

Moreover, the sources revealed to Nidaa Al-Watan that "banks argue that they need these fees to cover their expenses, as required by Circular 158 and to cover their operational expenses."

They pointed out that "some banks have started dipping into fresh dollar accounts to cover their expenses, and the Banking Control Commission is aware of this, and there is a report before the Central Bank Council on this matter.

But there is tight secrecy, as exposing these violations publicly would erode trust in fresh accounts, and their owners would rush to withdraw them."

They also noted that "the relevant authorities believe that banks engaged in such serious violations can cover their uncovered positions when necessary."

Furthermore, the same sources added, "There are those who do not want to escalate the issue and prevent it from exploding in the face of non-compliant banks, pending reform solutions, the most prominent of which is the restructuring of banks and the distribution of deposit losses that banks claim the state must reimburse to depositors."

Additionally, the sources explained that "the new circular from the Central Bank of Lebanon, if implemented, will push banks to the brink of bankruptcy and lead to a new wave of collective employee layoffs, additional branch closures, and a reduction of operations to the minimum possible."

The well-informed sources do not rule out that "banks may launch a campaign against the Acting Governor of the Central Bank of Lebanon, Wassim Mansouri, as they have started to feel the pressure of what he is doing, starting with suspending banks' benefits from the Sayrafa exchange platform and announcing that the exchange rate between 85,000 and 90,000 Lebanese pounds in the 2024 budget will force banks to withdraw deposits at this rate instead of the current LBP 15,000 to the dollar."

On the other hand, some sources have confirmed that "Mansouri is ready to respond to the campaigns and believes that it is not in the interest of banks to engage in battles with him now, as he has not yet said his final word."

In conclusion, it is through the efforts of the Depositors' Rights Protection Committee in the Beirut Bar Association, its proposal, and its follow-up that the Central Bank of Lebanon issued a circular Tuesday to alleviate some of the injustices against depositors and to curb the daily excesses and violations of banks, which must comply, or else be held accountable."