Banking conflict in Lebanon: Is the gap law being ignored?

Banking conflict in Lebanon: Is the gap law being ignored?

Yesterday an important meeting took place between the Lebanese Finance Minister Yassine Jaber and the Association des banques du Liban (ABL). The focus of the discussions was the explosive topic of the gap law, which is proving to be a challenge for the country. The discussions revolved around covering the gaps between the banks, the Lebanese state and the Banque du Liban. Many hope for an early solution, but the debt situation remains oppressive and unresolved.

The meeting was an attempt to defuse the tense situation after a heated argument broke out at a previous meeting. Although the mood was less tense, it became clear that convergence on the gap law and the restructuring of the banking sector is still a long way off. For many, the current crisis remains a SYSTEMIC problem, even if the Lebanese state does not address this in its legal texts.

New approaches and suggestions

The governor of the Banque du Liban, Karim Souhaid, notes in his legal analysis that the crisis has no chance as long as the nature of the systemic problems is not recognized. Minister Jaber, on the other hand, is trying to come up with a proposal that would provide for a retrospective legal and accounting review of bank accounts. However, there are no concrete criteria, which means the proposal is met with skepticism among experts.

A controversial point is the implication that parts of the deposits could be devalued or even canceled. The proposed CAP Law could push this even further, raising further doubts given the already shaky financial situation. Questions about the previous actions of the Commission on Banking Supervision, led by Samer Hammoud, shed additional light on the complex situation.

However, the position of the International Monetary Fund (IMF) appears to be unchanged: the pressure is on eliminating the banks' equity shares and relieving the state of any responsibility. This shows how challenging the current structures and their reforms are. The rift between Finance Minister Jaber and the ABL remains unchanged, underlining the ongoing uncertainty in the banking sector.

The general conditions for the Lebanese banks are tense, and a way out can only be found with clever and targeted solutions. While there is a struggle in the political arena, the concerns of citizens sitting on their savings are omnipresent. Now more than ever, developments in the financial scene require a good hand and a moment of wisdom on the part of decision-makers.

A crisis management strategy that focuses not only on the banks but also on the concerns of the people could potentially provide some breathing space. The next steps remain to be seen, especially given the global changes and challenges that may lie ahead for the Lebanese.