[ad_1]
There’s no easy way to bank in Lebanon anymore. Now, Lebanese are reporting additional arbitrary fees on dollar deposits on top of haphazard capital controls applied over the last year.
Local banks, strapped for cash, have imposed additional arbitrary fees on their clients that vary from bank to bank, after blocking withdrawals and transfers from their own accounts. Transfers in fresh dollars – or external dollars injected into the system – have been increasingly subjected to additional fees. Dollar- and Lebanese pound-accounts have been subject to varying maximum withdrawal limits.
These days, checks in dollars and Lebanese pounds are more akin to monopoly paper, as they cannot be immediately cashed.
Hani, a former banker, told Al Arabiya English that his bank imposed a 5 percent fee on his fresh dollar transfers from Europe.
He said his bank gave him two choices: either pay the 5 percent fee or put 15 percent of the transferred dollars in the account to withdrawal later in the local currency.
For all the latest headlines follow our Google News channel online or via the app.
Fresh dollar fees imposed by banks appeared to vary greatly from one bank to another, ranging from 1 to 5 percent, according to interviews conducted by Al Arabiya English. Fresh dollars refer to US dollars from abroad that are injected directly into Lebanon’s collapsing banking sector.
An ongoing dollar shortage has meant the local currency has lost nearly 80 percent of its value and customers can no longer make withdrawals at the official rate, which is still technically pegged to the dollar at 1,507 pounds to the dollar.
Nadine, another bank client, said her local financial institution imposed a 3 percent fee on her fresh cash transfers, in addition to regular transfer fees.
Despite the state’s financial collapse, the Lebanese government and parliament have so far refused to pass a capital control law, which experts say is critical to preserve Lebanon’s dwindling dollar reserves and apply withdrawal and transfer limits evenly.
Banks instead have imposed illegal and haphazard regulations on their clients, trying to recuperate losses anyway they can, losses caused by their heavy exposure to the state’s debt.
“Small and medium depositors are the first victim of the lack of regulation and the carelessness of the central bank as well as the Lebanese Banking Association. In Lebanon, power centers link the banking sector to the political class, leaving smaller depositors largely unprotected,” said economist Dr. Roy Badaro.
Exorbitant fees are also imposed on local businesses’ fresh cash online sales. For local businesses, only 70 percent of foreign online sales revenue is considered “fresh money,” according to business magazine Le Commerce du Levant. Banks impose different limits, which can range from 20 to 50 percent, that must be cashed in the local currency at the 3,900 pound to dollar exchange rate that the banks have set.
Dissatisfied customers cannot switch banks, as financial institutions are increasingly refusing to open new accounts in the local currency.
Read more:
As Lebanon subsidy crunch looms, two UN agencies warn of social catastrophe
Lebanon from golden age to economic crisis, new data shows rise and fall: Report
Lebanon’s central bank audit is a mere smoke screen
Former banker Dan Azzi explained that Lebanese banks are now operating like a cartel.
“They operate in total agreement among each other, we are in a situation of collusion. Banks are thus breaking what is known as antitrust laws in other countries,” he said.
Antitrust laws are generally developed by governments to protect consumers from predatory business practices and ensure fair competition, but this is not applied in Lebanon
With the central bank and the Ministry of Finance relinquishing their custodian role, banks are refusing to fulfill some of their basic functions. Bassel, a local contractor, explained that banks are refusing now to cash checks in dollars and Lebanese pounds.
“Instead, dollar and Lebanese pound checks have to be deposited in one’s account and only a certain maximum amount decided by the bank can be withdrawn every month while the rest is frozen over a certain period,” he pointed out. As an example, a client with $100,000 in an account can only withdraw $1,000 at 3,900 Lebanese pound to US dollar exchange rate, meaning the client actually only collects around $500.
For Badaro, it is clear that Lebanese banks, the ministry of finance and the central bank are colluding with one another, with abuses against depositors multiplying day by day.
SHOW MORE
Last Update: Monday, 14 December 2020 KSA 09:26 – GMT 06:26
[ad_2]
Source link
