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How BDL cheated clients out of their Sayrafa dollars

In December 2022, many bank customers rushed to deposit their lira with the expectation they would be able to later withdraw the funds in dollars. But BDL changed the rules.

How BDL cheated clients out of their Sayrafa dollars

Banque du Liban headquarters in Beirut. (Credit: João Sousa/L'Orient Today)

BEIRUT — For over a year now, Lebanese people have been accustomed to dealing with Banque du Liban's (BDL) Sayrafa rate.

BDL, in an attempt to inject fresh dollars into the market, allows depositors to withdraw US dollars from their Lebanese lira accounts at the central bank's Sayrafa exchange rate a few days after depositing their money

This rate is generally lower than the market rate, allowing customers to obtain more dollars for their Lebanese Lira than if they were to exchange them at the black market rate.

On Dec. 27, 2022, Banque Du Liban extended Circular No. 161 — the bylaw that allows for lira-dollar exchanges at the Sayrafa rate — and, for the first time, removed the cap on lira that clients could deposit for exchange.

Soon after the circular was reissued, customers formed long queues at their banks, depositing millions of lira with the expectation that they could withdraw those funds in dollars just a few days later.

At that time, the Sayrafa rate was around LL38,000 to the dollar while the black market rate was around LL46,000. Given the LL8,000 difference, customers expected to turn a profit.

Some banks — such as Bank Audi — imposed a deposit limit of LL250 million, a sum that still translates to approximately $6,579.

But, according to a source from Bank Audi, BDL changed the rules the next day, imposing a deposit limit of LL100 million (or $2,631).

Fouad Debs, a lawyer and co-founder of the Depositors' Union — which advocates on behalf of customers illegally blocked from accessing their foreign currency accounts — told L'Orient Today that many bank clients who deposited a large sum in lira still have not got their money back.

Debs said others got their money refunded in lira — the same currency they deposited — after weeks of negotiation. But during those weeks, the lira lost 36 percent of its value on the parallel market, dropping from LL46,000 to the dollar at the end of December 2022 to LL62,000 by Jan. 26, 2023.

A customer of Fransabank, speaking on condition of anonymity because he does not “want to ruin [his] relationship with the bank,” told L'Orient Today that he and his wife deposited LL100 million each on Jan. 15, 2023, and still have not been able to retrieve their funds.

“It's as if we were a victim of another scheme,” the customer said.

Banks have imposed a de-facto capital control on most clients' deposits since the start of Lebanon's crisis in 2019, blocking depositors from accessing funds in their own accounts. At the same time, the banks were reportedly transferring billions of dollars abroad.

A source from Bank Audi, who spoke on conditions of anonymity, said that “At the beginning of January, we were abiding by [Circular No. 161] normally, but then BDL stopped giving us enough funds to implement it, so we stopped accepting requests by Jan. 11. BDL later started giving us some funds, we followed the policy of first-in-first-out at the bank to give those who have already deposited their money back.”

“As for people who have deposited LL250,000 million at first, the next day [BDL] decided the limit was LL100 million, so we suggested to refund [clients] LL150 million because we didn't have a choice,” the source also said, adding that their bank is now back to accepting Sayrafa operations, but with a limit of LL50 million.

Rami Ollaik, a lawyer, activist and head of Moutahidoun ("United") depositor's union — the group that has organized multiple bank hold-ups in recent months — told L'Orient Today that “the banks tell [their clients] that they are closing, and treat them in a humiliating way.”

“As much as [the Sayrafa measures] appear to benefit regular customers at banks, the ones who are actually benefiting are BDL; the banks and many exchangers are the ones that are making the most profit,” Ollaik continued. “Sayrafa is ... a pattern [of decisions] that allows some to make use of the different exchange rates.”

L'Orient Today reached out to BDL for comment, but the central bank did not immediately respond.

Dania Kassar, a spokesperson for Fransabank, responded to Ollaik's allegations. ”These things are not necessarily true,” she told L'Orient Today. “In fact, they are not true if taken across the sector, maybe for specific entities only.”

Failed Sayrafa Circulars

Banque du Liban on Monday decided, for the 13th month in a row, to extend its main Circular No. 161 in an effort to mitigate dramatic fluctuations in the lira's parallel market value.

Since the beginning of the crisis in 2019, the lira has lost 97 percent of its value compared to the former official rate of LL1,507.5 to the dollar that the country lived with for more than 20 years.

Debs said that if BDL's governor Riad Salameh's real intention is to absorb the lira from the market and inject dollars to reduce the exchange rate, his tactic “clearly failed.”

“There is no plan for the lira rate to remain stable,” Debs said. “They just [issued Sayrafa circulars] to transfer wealth to a small percentage of the population and to keep the masses silent.” 

BEIRUT — For over a year now, Lebanese people have been accustomed to dealing with Banque du Liban's (BDL) Sayrafa rate.BDL, in an attempt to inject fresh dollars into the market, allows depositors to withdraw US dollars from their Lebanese lira accounts at the central bank's Sayrafa exchange rate a few days after depositing their moneyThis rate is generally lower than the market rate, allowing...