March 10, 2020 / 6:29 PM / 22 days ago

Lebanon banks, prosecutor agree rules for easing deposit restrictions

FILE PHOTO: Concrete barriers erected by authorities to block a street hosting banks and financial institutions near the government palace in Beirut, Lebanon, January 24, 2020. REUTERS/Aziz Taher/File Photo

BEIRUT (Reuters) - Lebanon’s public prosecutor has agreed with commercial banks a set of rules aimed at protecting the rights of depositors, state news agency NNA reported on Tuesday, potentially easing restrictions on deposits amid a dollar shortage.

Lebanese banks, fearing capital flight and grappling with an acute hard currency crunch, have imposed tight controls on withdrawals and transfers abroad, drawing outrage from depositors unable to access their savings.

The agreement, which appears to be an attempt in part to standardize rules across the sector, states banks must transfer foreign currency abroad for payment of school fees, medical costs, taxes and “all that is necessary,” as well as for imports of medical supplies, foodstuffs not produced in Lebanon, and goods deemed critical by the central bank, NNA reported.

Banks must also pay out in full any hard currency transferred into Lebanon from abroad and refrain from changing any deposits from dollars to Lebanese pounds without customer consent, NNA reported.

An official at the public prosecutor’s office confirmed the new rules, but did not provide further comment.

The rules come days after Lebanon announced it would not meet its upcoming debt payments in order to preserve dwindling foreign currency reserves to cover essential imports.

The central bank governor has called for capital controls to be standardized so depositors are treated equally and fairly and Prime Minister Hassan Diab said the government would soon present a draft law to standardize the controls.

Reporting by Eric Knecht; Editing by Mark Potter

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