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Lebanon: BDL Sets Up Committee to Restructure Banks

Lebanon: BDL Sets Up Committee to Restructure Banks

Thursday, 16 July, 2020 - 13:45
FILE PHOTO: A young demonstrator stands outside the Central Bank of Lebanon in Beirut, Lebanon, October 25, 2019. REUTERS/Alkis Konstantinidis
Asharq Al-Awsat

Lebanon's Central Bank (BDL) has set up a committee to restructure financially stricken commercial banks and study their performance, according to a memo by the bank.

The panel will also propose measures to preserve the soundness of the banking sector, the memo said Thursday.

Lebanese banks are poised for a major shake-out after the country plunged into a financial crisis last October that has ballooned prices, slashed jobs, and brought on capital controls that have frozen people out of their dollar savings.

A government rescue plan that has served as the cornerstone of talks with the International Monetary Fund to help Lebanon out of its financial crisis maps out massive losses in the financial system.

The talks with the IMF have been bogged down by a dispute between the government and the central bank over the scale of the losses and how they should be shared.

Lebanese Finance Minister Ghazi Wazni told AFP in May that the banking sector restructuring would be carried out "step by step," and possibilities included "merging" financial institutions.

"Lebanon counts 49 commercial banks and it is normal for that number to decrease to around half of that in the next stage," he said.

Lebanon’s banks serve a population of around 6 million. The sector has swelled to four times the size of the economy thanks to decades of taking in billions of dollars every year from the country’s widely scattered diaspora to help fund the government.

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