A cautiously tense meeting brought together Finance Minister Yassine Jaber and a delegation from the Association of Banks in Lebanon (ABL), dedicated to discussing the points related to the Financial Gap Law. The talks focused on how the banks, the Lebanese state, and the Central Bank would handle the existing gap and on reassessing the banks’ situation based on the Bank Restructuring Law and the allocation of losses.
This meeting followed the recent stormy session held at the Ministry of Finance, which had revealed clear disagreements between the ABL and Minister Jaber. According to sources, today’s meeting may have been calmer in tone, but substantively nothing has changed in the ministry’s approach: no agreement was reached on several key points regarding the Financial Gap Law and the restructuring of the banking sector.
So far, the government’s approach suggests nothing promising when it comes to the Financial Gap Law or bank restructuring—both seemingly dictated by the International Monetary Fund. The government and its Finance Minister insist on returning to square one in their description of the crisis, even though Jaber acknowledged today that the government now recognizes the nature of the crisis as fundamentally different from previous ones: it has engulfed the entire banking system, with the Central Bank itself now part of the problem. This makes it a systemic crisis, requiring exceptional measures and legislation, far removed from traditional banking crises.
Yet despite Jaber’s verbal recognition of this “systemic” crisis, nothing in writing reflects it—not in the Financial Gap Law draft, nor in the Bank Restructuring Law—despite the fact that the Central Bank Governor, Karim Souhaid, explicitly endorsed this characterization in one of his major legal analyses.
The government insists on avoiding any written acknowledgment of the systemic nature of the crisis—following the recommendations and conditions of the IMF—in order to evade responsibility for the cost of the crisis and the debts resulting from it. These debts are nothing but the Central Bank’s obligations to the banks, which ultimately represent depositors’ funds.
Another “innovation” the IMF is pushing on the government emerged in the last meeting between the Finance Minister and the ABL: the idea of conducting a retroactive forensic audit of bank accounts, without any defined criteria, to enable an “additional classification” of deposits. The intent is to search for unscientific and legally baseless justifications to reclassify deposits and write off part of them.
The government, under IMF pressure, is seeking to reduce the financial gap at any cost—which inevitably means wiping out more deposits. This raises serious questions about the role of the Banking Control Commission in past years—an institution once headed by Samer Hammoud, who is now the finance minister’s advisor and the point man leading the “bank audit” push. Where was the commission then? And shouldn’t it be held accountable?
After heated debate around this IMF requirement—raised in the Fund’s preliminary remarks on the Financial Gap Law—Minister Jaber adjusted his stance. In today’s meeting, he proposed assessing banks’ assets rather than conducting a forensic audit of their accounts, still without offering any standards or clear mechanism. This left the matter opaque and unresolved.
As for the IMF’s approach—wiping out bank capital, placing the full burden of losses on the banking sector, and exempting the state from any responsibility, which ultimately means sacrificing depositors’ money—it remains unchanged.
The divide between Minister Yassine Jaber and the Association of Banks is still stark, whether regarding the Financial Gap Law and the recovery of deposits or the amendments related to the Bank Restructuring Law.
Comments