Bank clients in Lebanon won't give up trying to recover lost savings
by Dalal Saoud · UPIBEIRUT, :Lebanon, Aug. 5 (UPI) -- Bank depositors in Lebanon, who lost their lifetime savings in the country's worst financial collapse seven years ago, are neither giving up nor resigned to the possibility their savings may be beyond recovery.
They continue to reject years of empty promises, the absence of a credible and comprehensive financial recovery plan and the failure to hold those responsible for the financial disaster accountable, all of which have left them with little prospect of getting their money back.
After suspending their protests because of the Israel-Hezbollah war, a group of depositors returned to the streets last week, staging demonstrations, storming bank branches and setting fire to their entrances.
Although they numbered only about 200 -- a small fraction of the estimated 700,000 to 800,000 depositors -- they represented a broader movement of groups and associations formed after the 2019 financial collapse to defend depositors' rights, including those of the Lebanese diaspora.
The protesters targeted the banks, which they hold responsible for loss of their savings and for not repaying depositors.
"Our relationship as depositors is directly with the bank. We entrusted it with our money as deposits, not so it could use our funds to lend to the government or buy government bonds," Richard Pharaon, president of the Association of French Depositors in Lebanon, told UPI.
Pharaon said the banks were wrong to concentrate an excessive share of their assets with the central bank, far beyond the 20% limit on credit exposure to a single borrower. This allowed the central bank to extend excessive lending to the government, with much of those funds squandered through corruption and mismanagement.
According to depositors and financial analysts, a "corrupt" political elite, financial officials and "greedy" bankers all were complicit in the scheme, leaving at least some $83 billion in bank deposits frozen and no one willing to take responsibility for the fallout.
The depositors contend the central bank's financial engineering strategy encouraged banks to place large portions of depositors' funds with the central bank and invest heavily in government debt in exchange for unusually high returns, deepening the financial system's exposure to the state's mounting debt.
Pharaon said depositors would not back down from their demands and would continue to escalate protests until those responsible were held accountable and they could recover their rights.
He said the authorities, Parliament and the judiciary were "all watching how our savings are melting," while delaying recovery plans and key reform laws needed to address the financial crisis.
With monthly withdrawal limits imposed by the central bank since the beginning of the crisis -- gradually raised from $300 to between $500 and $1,000, depending on the type of account -- depositors desperate for cash were forced to access their savings at the central bank-set exchange rate of 15,000 Lebanese pounds (about 17 cents) per U.S. dollar, compared with the market rate of around 89,500 pounds, equivalent to $1.
That effectively means that when a depositor seeks to withdraw $10,000 from his savings, he receives the equivalent of only $1,500 when converted at the 15,000 Lebanese pounds per dollar rate applied by banks -- money needed "to pay for medical insurance, children's education and even the essentials to survive," according to Pharaon.
"So many have already exhausted their savings. ... They had no other option," he said, adding that a considerable number of depositors who were in their 70s or 80s when the financial crisis erupted "died of heartbreak, suffering from illnesses they could not treat because they lacked the money."
After seven years of losses and unfulfilled promises, "enough is enough" has become the rallying cry of Lebanon's depositors.
Despite pledges by the new reformist government of Prime Minister Nawaf Salam to ensure the recovery of all bank deposits, and some progress in implementing long-overdue reforms, uncertainty and doubt continue to prevail among depositors.
Khalil Broumana, the public relations officer of the "Depositors' Outcry Association," criticized the country's authorities, politicians and bank officials, whom he described as "thieves," the judiciary and even religious leaders "for not doing anything" to help recover depositors' funds.
"No one listens to us," Broumana, 63, who lost his savings in the crisis after working for many years in the real-estate business, told UPI.
He said that he categorically rejected the de facto banking restrictions, the central bank's measures and what he described as "suspicious" laws being drafted.
"There are clear laws in the Constitution," he said, referring to the "protection of private property," which depositors maintain includes their bank savings and whose sanctity must be protected. They contend that restrictions preventing them from recovering their funds undermine this basic right.
The government's counterargument is that it lacks the funds to repay depositors in full and has instead devised an initial plan to return about $100,000 in cash over four years, with the remainder to be repaid in asset-backed securities over 10 to 20 years -- an option strongly rejected by depositors.
For Marcelle Bou Malhab, a business development expert and one of the depositors in the Lebanese diaspora, accepting such a settlement is out of the question.
Bou Malhab spearheaded the establishment of the "Union of Lebanese Expatriate Depositors" in 2023 after losing hope that Lebanese officials and parliamentarians had the political will to resolve the crisis.
What started as a small group of four or five depositors in Dubai has grown into a global network of 1,400 members, with more than 4,000 followers across its social media platforms.
"They trust us because our only goal is to recover our money, free from politics or any other agenda," Bou Malhab told UPI. "We keep a close watch on any politician who stands against depositors. We will not allow any of them to deprive us of our rights."
The diaspora has long been the backbone of Lebanon's economy and a humanitarian lifeline during the country's darkest times, sending billions of dollars in remittances estimated at between $6.5 billion and $7 billion a year.
Angry and frustrated, expatriate depositors say they will spare no effort to keep up the pressure until those responsible for destroying the country's economy are held accountable and brought to justice.
Bou Malhab said they had decided not to send money or invest in the country "to make them feel the pain they caused us."
She maintained, echoing the views of many Lebanese, that the country is not bankrupt, but has been plundered, and that its 286.8 tons of gold reserves and other assets "could be liquidated or invested" to repay depositors.
Securing the funds -- in one way or another -- would be key to protecting depositors' rights and, most importantly, restoring confidence in the country, she said.
Ibrahim Kanaan, chairman of the parliamentary Finance and Budget Committee, which is reviewing the banking sector restructuring law, said that laws and plans alone cannot ensure the country's recovery.
"It is about securing funds and restoring confidence," Kanaan told UPI, emphasizing that confidence cannot be restored without recovering the bank deposits -- "but that requires courage and a willingness by the state, the central bank and the banks to share the burden of the losses."