Customers in front of an ATM in Beirut. (Credit: PHB)
Secretary-General of the Association of Banks in Lebanon (ABL) Fadi Khalaf told al-Markaziya news agency Monday that not one “major European bank” had decided to suspend its correspondent banking relations with Lebanese institutions following the issuance of an Interpol red notice against Banque du Liban Governor Riad Salameh.
This information was reported by the pan-Arab daily Asharq al-Awsat, before being shared on social media.
However, Khalaf, a former chairman of the Beirut Stock Exchange, added that one European institution had recently stopped working with three Lebanese banks, but he added that this decision was taken for “profitability” related reasons.
He added that the European institution in question maintained its relations with other Lebanese banks with which it was already doing business, without naming any of the banks involved.
L’Orient-Le Jour reached out to Khalaf for comments, but he did not provide further details.
Confirmations from within the sector
Two banking sources told L’Orient-Le Jour on condition of anonymity because they are not authorized to speak to the press that the institution in question is the German Commerzbank AG, whose name appears on the websites of several Lebanese institutions, mainly Lebanon’s alpha banks, i.e., the largest in the country in terms of assets and deposits according to pre-crisis classifications.
The sources said that the German bank continues to maintain its relations with “five Lebanese banks” and that these relations are not at risk.
Having failed to reach a spokesperson for Commerzbank by phone, L’Orient-Le Jour sent an email to the bank on Monday evening asking for verification of the sources’ assertions. No reply had yet been received at the time of publication.
One of the two banking sources added that the information on the “major European bank” halting relations with three Lebanese banks dates back several weeks.
Correspondent banking relationships allow institutions in one country to domicile accounts in another country that has a different currency so that transfers can be made from one country to another.
Those linking Lebanese banks to banks in Europe or even in the United States have been disrupted by the Lebanese banking sector crisis that has been ongoing since 2019.
The fact that Interpol issued a red notice against Salameh on May 18, following an international arrest warrant issued against him by the French judiciary two days earlier, has fueled speculation about the reaction of banks in countries with ties to Lebanon.
The Lebanese cabinet has a meeting scheduled for Friday, at which it is believed it will resume its consideration of the fate of the governor, who has been in office since 1993. Salameh, whose term in office ends in July, has to date only gone as far as to say that he would step down if proven guilty..
Khalaf’s remarks on Monday are the first public reaction from ABL since these two developments.
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.