Lebanon banks tighten withdrawal caps, sparking outcry

Banks have imposed informal controls on dollar withdrawals and transfers abroad since September amid anti-government protests

Major banks in Lebanon began tightening banking controls this month, halving the amount of dollars depositors are allowed to withdraw every month, despite growing public outcry. AP Photo

Major banks in Lebanon began tightening controls this month, halving the amount of dollars customers are allowed to withdraw every month, despite growing public anger.

Faced with a dollar liquidity crunch, banks have imposed informal controls on withdrawals and transfers abroad since September amid widespread anti-government protests and Lebanon's worst economic crisis in decades.

Withdrawal limits differ from bank to bank but have so far generally been capped at about $1,000 (Dh3,673) a month, while most transfers abroad have been halted.

Some banks have now imposed even tighter restrictions.

Three major banks contacted on Monday said they halved the dollar withdrawal limit since the start of February, with some capping it at $600 a month.

Several banks have allowed slightly larger allowances to depositors who have more than $100,000 in their accounts, customers said on social media.

But even those who have more than $1 million in their accounts cannot withdraw more than $2,000 to $3,000 a month.

The informal controls have sparked public outrage in Lebanon, where an anti-government street movement launched on October 17 has grown increasingly angry at banking policies.

"These new illegal measures by banks come with the political blessing of the new government," activist Lucien Bourjeily said.

The new Cabinet, which was formed last month, is expected this week to outline its financial rescue plan.

Experts and demonstrators say banking controls amount to a "haircut" on savings because they are forcing dollar depositors to deal in the plunging Lebanese pound.

The currency has fallen against the greenback on the parallel exchange market, although the official peg of 1,507 pounds to the dollar in place since 1997 remains unchanged.

Central bank chief Riad Salameh last month said he agreed with exchange houses to cap the parallel rate at 2,000 pounds. but several continue to charge rates edging towards 2,200 pounds.

Mr Salameh last month asked for special powers to authorise banks to set withdrawal limits, which had not formally been backed by the government.

But the Finance Ministry has yet to publicly respond to his request.