ABL rejects rescue plan passed by cabinet

BEIRUT — The Association of Banks in Lebanon on Tuesday rejected a financial recovery roadmap passed last week by the country’s cabinet, saying it would “place the full losses” of the country’s economic meltdown on depositors.

Here’s what we know:

    • In a statement, ABL accused the government of “erasing with a pen” the depositor’s money “despite the existence of alternative clear solutions, particularly that suggested by ABL to group state assets under a fund structure and use part of the profits to pay back the depositors.”

   • Exactly one month ago, ABL released a statement denouncing the government's intentions and described an earlier version of the plan as “disastrous” as it would leave banks and depositors shouldering the “major portion” of losses.

   • ABL also said in April that it assigned legal advisers to examine and present a range of judicial measures that will allow the preservation and recovery of the rights of the banks and the depositors.

   • The banks’ shareholder equity dropped $4.4 billion from $ 20.6 billion at the end of October 2019 to $ 16.2 billion at the end of March 2022. According to the government’s recovery plan, the remaining $ 16.2 billion will be completely written off once the government begins the restructuring process. In the case the bank is deemed solvent, then the existing shareholders will be replaced with the depositors, since part of their funds will be converted into shares, otherwise the bank will be liquidated.

   • The cabinet approved the economic recovery plan on Friday in its last session before it entered caretaker status following the conclusion of parliamentary elections the previous Sunday. 

   • Responding to ABL’s criticisms in a statement issued Tuesday evening, caretaker Deputy Prime Minister Saade Chami accused the banking body of “distorting the facts” and alleged that “bank shareholders are trying to protect their wealth and link their fate to that of depositors.” Emphasizing that the plan was “approved by international parties and is the only way to secure a deal with the IMF,” Chami said there is no truth in claims that “the plan is trying to absolve the state or the central bank from their responsibilities.”