BEIRUT – The Association of Banks in Lebanon (ABL) was supposed to hold an “extraordinary” general assembly on Wednesday to discuss one main point on its agenda: the amendment of Article 13 of its statute, which would extend the term of the current board of directors, led by its president Salim Sfeir, and potentially expand its board from 12 to 14 members.

However, the meeting fell through when the association failed to secure the necessary quorum, requiring the presence of at least 75 percent of its 44 members. Without this quorum, the proposed amendment could not be approved. This leaves Sfeir, first elected in 2019 and whose term was extended for a year in July 2023, unable to run for a third term without the changes to the association’s bylaws.

A clear divide seems apparent within the association, with tensions rising between the major Lebanese banks, which constitute a majority in the association, and a minority of 15 smaller banks.

This situation comes amid Lebanon’s ongoing economic crisis, now in its fifth year, which has led to the collapse of the country’s banking sector and a lack of consensus on a bank restructuring plan to address the $70 billion in financial losses that looms over these institutions.

Smaller Lebanese banks are seeking representation, in vain

Raed Khoury, chairman of Cedrus Bank, one of the 15 smaller banks in the country, told L’Orient Today that small banks were seeking the addition of two extra board representatives because they “sometimes have different interests than the bigger banks, and they would like to be able to convey them.”

“There’s a prevalent opinion among small banks that the existing board does not always factor in our interest, and we feel we’re not always given the full information,” said Khoury, who believes they are underrepresented in the association today.

Small banks, who represent around 30 percent of the total votes, are demanding two extra seats at the table. “Historically, we’ve always been followers, not leaders, in the association’s decisions,” Khoury added, referring to financial engineering schemes that have proven detrimental to them and the country.

Khoury stressed that the small banks do not oppose the reelection of Salim Sfeir but do not understand the resistance to expanding the board to include two additional members.

According to Tanal Sabbah, chairman of Lebanese Swiss Bank — another smaller bank — the association faces another problem: there are no alternative candidates to Salim Sfeir, as no one seems to be willing to run for the presidency amid the current economic turmoil that the banking sector is experiencing. This opinion was echoed by a banker in one of Lebanon’s prominent banks, who spoke to L’Orient Today on the condition of anonymity.

Historically, the appointment of a new president has mostly been done by consensus rather than voting, with exceptions in 2017 and 2021.

Sfeir was unanimously elected as president in 2019.

The failure to hold today’s general assembly and amend the necessary bylaws changes nothing, explained Khoury. The financial year ends only when the association completes its annual audit of financial accounts, which has yet to be done and has no set deadlines. To that end, Khoury said that the board's mandate remains “valid and legal”, despite the lack of agreement or extensions voted upon today.