Savings “evaporate”, legal battle between depositors and banks heats up in Lebanon

With the call Economic Crisis has entered its fourth year, people Lebanon is facing a difficult and deadlocked life due to the crippled financial system. A legal battle between depositors and Lebanese banks has begun to heat up.

When Fransabank in Lebanon informed Mr. Aref Yassin (Head of the Lebanese Association of Engineers and Architects) that it had closed a $20 million account belonging to the Association of Engineers and Architects, which he headed, instead would issue a check for a balance worth only one-fifth of its face value, he took the matter to court.

Mr. Yassin is just one of many savings account holders suing banks in the hope of getting their money back. And in response, many banks closed accounts and issued balance checks without consulting customers.

Lebanon is suffering from an economic crisis that has entered its fourth year. (Photo: Deutsche Welle)

According to Karrim Daher, Chairman of the Depositors’ Rights Committee, Beirut Bar Association, retail depositors are hardest hit by deposits that are not large enough to win lawsuits. His bar association has filed about 300 lawsuits on behalf of people save money in Lebanon since 2019, but only about 10 cases were concluded in favor of depositors.

The banks simply closed people’s accounts because they didn’t want the money back, the lawyers said. And this is happening more and more because the banks find that there is no regulator against them.

Lebanese officials have so far failed to come up with a recovery plan to tackle the country’s nearly four-year financial crisis. They also have not passed capital control laws to protect the interests of depositors as well as prevent money from flowing abroad. The World Bank calls it one of the worst financial crises the world has on record.

More than $100 billion is still trapped in Lebanese banks. Lawsuits are still ongoing to get access to any remaining cash in the banking system.

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