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Lebanese Central Bank Instructs Banks to Cap Interest Rates on Deposits

Lebanese Central Bank Instructs Banks to Cap Interest Rates on Deposits

Wednesday, 4 December, 2019 - 12:15
A man counts Lebanese pounds at an exchange office in Beirut, Lebanon, August 16, 2018. (Reuters)

Lebanon's central bank told commercial banks on Wednesday to cap their interest rates on deposits in foreign currencies at 5% and to cap the rate on Lebanese pound deposits at 8.5%.

The central bank also said it would pay interest due on US dollars deposited with it by Lebanese banks half in US dollars and half in Lebanese pounds as an exceptional measure. It said the same applied to US dollar certificates of deposit issued by the central bank.

In a circular seen by Reuters, it said the cap on interest rates would apply to all new deposits and those renewed from December 4.

It said banks should pay interest on foreign currency deposits half in the currency of the account and half in Lebanese pounds.

The measures would be valid for six months, it said.

All deposits made before December 5 would remain subject to the agreement between the bank and the customer, it said.

The central bank circular said the decisions aimed to "preserve the public interest amid the exceptional circumstances that the country is presently going through and to safeguard the interests of depositors by not decreasing their bank deposits".

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