Lebanese deposits in banks .. How will they be restored and who will bear the losses?

Renewed, the fate of the Lebanese deposits with the banks returned to the fore, after the statement of the Minister of Finance Yassin Jaber, in which he indicated that the depositors ’money will be treated by granting them debt bonds attached to the benefits that are included in the financial and stock markets.

Jaber touched on the project to restore small deposits in cash up to 100 thousand dollars, knowing that it constitutes 85% of depositors, while deposits are above 100 thousand dollars, they are paid through sovereign debt bonds attached to the benefits that are included in the financial and stock markets and those who wish to sell through them can be paid through them.
The Minister of Finance also announced that there is a permanent consultation in order to come up with a fair plan for the depositors, stressing that “the state, the Bank of Lebanon and the banks will bear its responsibilities in paying the deposits.”
Is this plan to be implemented and constitutes a solution to a continuous crisis for more than 5 years? Will the Lebanese be able to recover their detained money soon?
In this context, the financial and economic expert, Dr. Bilal Alama, through “Lebanon 24”, considers that “the essence of the deposit problem is the huge gap between foreign currency commitments and the ability of the state and the financial system to pay”, stressing that “a fair and fair distribution of losses must be adopted according to a clear hierarchical with the protection of small depositors.”
He adds that “before all, small deposits must be protected, the structure of banks, the establishment of deposit recovery fund, the debt/ownership tools of the senior depositors, the proceeding of a legislative path, in addition to signing an agreement with the International Monetary Fund,” noting that “through the implementation of these basic points it is possible to reach a partial restoration of deposits and control social and monetary risks.”
Alama explained that “the financial crisis resulted from unaccurated financial policies, accumulated deficit, government financing through banks and the Lebanon Bank that led to restrictions on withdrawals, transfers, the collapse of the exchange rate, and a sharp economic stagnation.”
He stressed that “the solution must be through a interconnected package, not separate procedures, which leads to the protection of young depositors, and the adoption of justice in the distribution of losses, transparency and accountability, so the procedures are subject to implementation and lead to a critical sustainability.”
Distribution of losses
And on the distribution of losses, the parties to the parties concerned to 5:
-The Lebanese state bears 40% of the losses in its capacity as responsible for the accumulation of deficit and financial engineers.
-The Bank of Lebanon is 20%, as it has a direct responsibility for monetary and financing policies.
Commercial banks bear 20% due to their benefit from interest and financial engineers.
The adult depositors are 20%, i.e. partial loading through financial tools or royal transfers.
Finally, small depositors are 0%, i.e. complete protection until a specific ceiling (for example $ 100,000).
Time road map
He pointed to the necessity of a road map of up to 24 months, which is divided into stages:
The first stage extends from 0 to 3 months during which basic laws are approved in addition to checking the financial gap.
The second stage from 4 to 9 months, during which the banks are classified in addition to the launch of the recovery fund and the payment of small depositors.
The third stage from 10 to 18 months, during which financial tools are issued for senior depositors, in addition to starting the recovery of looted funds.
The last fourth stage from 19 to 24 months, during which the scope of payment of medium slices is expanded with periodic reports on transparency.
“This plan begins with a legislative path that opens the door to determining the size of the financial gap, then a practical mechanism is launched to protect the small depositors, followed by the introduction of solutions to adult depositors through debt and ownership tools.”
He added: “In parallel, the looted funds are recovered by opening the door for accountability and accounting completely with a retroactive effect of 20 years and investing the returns of public and oil assets.”
International comparisons
He gave examples of countries that adopted several solutions to restore deposits to depositors. For example, in 2013, Cyprus protected small depositors and imposed a deduction on their elders. In 2008, Iceland bore the shareholders, while Greece, during its financial crisis, baptized banking with external support. As for Argentina, it highlighted the danger of delay in reform during its financial and critical crisis.
Hard path
He considered that “this path is difficult, but it is possible and its success requires a mixture of extensive social protection, financial reform, serious bankers and transparent governance,” stressing that “the goal is to restore the Lebanese economy to the path of recovery, and to ensure a gradual restoration of deposits in a just and sustainable framework.”
In the outcome, the Lebanese are eagerly awaiting solutions to their money, which has been detained for more than 5 years in banks, and they hope that they will regain the “reaping of life” with the least possible losses. Will this matter be fulfilled soon?