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BANK LAWSUITS

British embassy in Lebanon 'deeply concerned' at bank account closures

The British High Court of Justice has ordered two Lebanese banks to pay some $4 million to a Lebanese-British depositor. (Credit: Ben Stansall/AFP)

BEIRUT — As an international law firm announced a British court's judgment in favor of a depositor against two Lebanese banks, the British embassy in Beirut said on Friday it was "deeply concerned" by Lebanese banks closing accounts belonging to people who are nationals or residents of the United Kingdom.

The British High Court of Justice had previously ruled in favor of a Lebanese-British businessman, Vatche Manoukian, in a complaint against Lebanese banks, Bank Audi and SGBL for having refused to execute requests to transfer funds from Lebanon to abroad in 2019.

The Feb. 28 UK court order required Lebanon's Bank Audi and its peer SGBL to transfer $4 million to a client, the first UK ruling obliging Lebanese banks to transfer dollars out of the banking system, raising the prospect of similar actions.

The law firm Bryan Cave Leighton Pasiner LLP, which represents Manoukian, announced Friday that the court handed down its "fully reasoned judgment" in the case, in favor of the depositor. The law firm described the decision as "groundbreaking in being the first full merits judgment in any jurisdiction on the international transfer rights of banking customers under Lebanese law."

Also on Friday, the British Embassy in Lebanon embassy said that "unilateral action" by banks had singled out account holders on the basis of their British residency or nationality, in "what appears to be a targeted and discriminatory manner."

The statement did not name any lenders in Lebanon's crisis-hit banking sector, where more than $100 billion of hard currency savings remain stuck, with most depositors unable to access their funds.

A union for savers with funds stuck in Lebanese banks says that more than 50 British savers have been in touch because their accounts were unilaterally closed or they feared their closure, since the Feb. 28 UK court ruling ordering the two Lebanese banks to transfer funds to Manoukian.

Lebanon's financial system collapsed in 2019 under the weight of massive public debts caused by decades of corruption, waste and patronage by the government, which borrowed heavily from the Lebanese banks.

In the absence of any capital control law in Lebanon, banks began imposing informal restrictions on withdrawals and transfers abroad as the financial system collapsed in 2019.

These controls were never formalised with legislation and have been challenged in local and international courts, with mixed results.

Legal tussles between banks and depositors seeking their cash are also playing out in Lebanon.

And, in response, more banks have been closing accounts and issuing cheques for the balance without consulting clients, lawyers acting for depositors say.

British Ambassador Ian Collard urged "the Lebanese authorities to ensure that all depositors are properly and fairly treated, and he underlined the importance of Lebanese banks not discriminating against account holders on the basis of their British nationality or residency".

In meetings with officials including the central bank governor and the prime minister, he "made clear his concerns about the treatment of British national and British resident depositors", the statement said.

(Reporting by Enas Alashray; Writing by Tom Perry; Editing by Hugh Lawson and Susan Fenton)


BEIRUT — As an international law firm announced a British court's judgment in favor of a depositor against two Lebanese banks, the British embassy in Beirut
said on Friday it was "deeply concerned" by Lebanese banks
closing accounts belonging to people who are nationals or
residents of the United Kingdom.The British High Court of Justice had previously ruled in favor of a...