Banks are racing to invent tools and products that aim to attract cash dollars, even at the expense of recording large losses in their budgets, in order to avoid defaulting on the correspondence of foreign correspondent banks, and write them off the list of banks dealing with them internationally.Although the Bank of Lebanon recommended to the banks, during its last monthly meeting with the Association of Banks, “to stop marketing to the public the financial product that requires obtaining new funds in dollars in exchange for a greater rate than the local American dollar, as these practices lead to increasing pressure in the exchange market”, However, the central bank left an open window in this framework, as it said, “These operations can be understood only if they are for specific exceptional cases.”
This window prompted banks to partially stop marketing products that doubled the amount of new money in dollars (Fresh Money), but they kept them in place, and even added more incentives to them, for their borrowing clients, that is, who have bank loans in dollars.The open window maintained by the Bank of Lebanon allowed banks to devise other solutions that meet their urgent needs for foreign currency in cash, as some banks began communicating with their customers, owners of large loans, offering to repay their entire bank loan at a value less than half the size of the loan, provided that Pay it in new dollars. That is, if the loan size is 100 thousand dollars, the bank offers the customer an insurance of only 45 thousand dollars in cash, so that his entire debts can be written off.
More than that, some banks also accept a smaller amount of new cash dollars in addition to another part of the money in Lebanese pounds on the exchange rate of 1515 pounds, in order to repay the loans of its customers. That is, if the loan amount is 100 thousand dollars, the customer must secure 25 thousand dollars in cash, and the equivalent of 20 thousand dollars in Lebanese pounds on the official exchange rate, which is equivalent to about 30 million pounds, against the payment of a loan of 100 thousand dollars.
On the goals of these practices, the banking expert, Dan Azzi, told Al-Gomhouria that the banks are in dire need of real dollars, not delusional and carrying books.
The first is the biggest possibility: to pay the credit facilities (LCS) granted by correspondent banks abroad, because it cannot be paid in fictitious dollars. Kazzi stressed that this process incurred the shareholders of the banks concerned losses in their rights, because it is not possible in any way to cover these financial differences.
The second: to secure cash dollars in order to complete the process of withdrawing cash in foreign currency for the benefit of one of the major customers, or for the benefit of the shareholders of the bank concerned, pointing out that the only reason for any bank to bear artificial losses is to protect personal interests.