does not apply The new circular issued today, June 8, 2021, to all depositors. It is also not free from some ambiguous matters, which the depositor must clarify before he agrees to benefit from the circular.
Basic Circular Terms
In its circular 158, which obligates all banks to implement, the Banque du Liban requires that the depositor’s account in dollars be opened before the date of October 31, 2019, and the circular does not apply to funds transferred from lira to dollars after the mentioned date.
In the event that the depositor agrees to benefit from Circular No. 158, the bank creates a special sub account for him, and the banking secrecy is lifted from this particular account, and the bank transfers to this account the equivalent of 50 thousand dollars or less, according to the amount available in the account or accounts. depositor. In the event of multiple accounts of the depositor, the latter can specify the accounts from which the transfer can be made to his own sub-account.
It is not decided, according to the circular, that banks impose any expenses or commissions on sub-accounts, and no amount can be transferred to or transferred from the aforementioned account. It is also not possible to deposit in it after the date of opening.
The depositor will be required to withdraw the transferred amount to his own subsidiary account in the amount of $400 in cash, or by transfer abroad or by bank card in Lebanon or abroad. He can also deposit the withdrawn amount in another new account, i.e. a fresh account, provided that the sum of what he withdraws in dollars from his account in the bank or banks does not exceed 4800 dollars during a whole year. In addition to the equivalent of 400 dollars in Lebanese pounds based on the price of the sayrafa electronic platform (currently 12000 pounds), with 200 dollars to be paid in cash, i.e. two million and 400 thousand pounds, and 200 dollars in pounds by bank cards, provided that the total amount that can be withdrawn from Banks in Lebanese pounds equivalent to 4,800 dollars on the platform price.
The depositor may withdraw the amount specified in the circular, in whole or in part, at his convenience. But if the monthly limit is not withdrawn ($400 and $400), the undrawn amounts will accrue to the following months. Thus, he can withdraw it later within a year.
There are many caveats and remarks about circular 158. The latter is also not without vague and unclear details, which may reflect negatively on the applicant at a later time.
For example, if the depositor wants to benefit from the provisions of Circular No. 158, he cannot continue to benefit from the provisions of Circular No. 151, which allows him to withdraw according to the current exchange rate of 3900 pounds.
He does not benefit from the aforementioned circular, meaning that it is not possible to withdraw his deposit in dollars for every person who owes the bank, except after deducting the balances of his frozen accounts as a cash guarantee against loans or facilities, and deducting the value of the part of his debit accounts in foreign currencies with the concerned bank, which has been and will be repaid throughout the period of his benefit. From the provisions of the circular.
The circular did not clearly specify the link to benefit between the two parts of the circular, that is, withdrawals in dollars and pounds. But according to the information, withdrawals in dollars and pounds are interrelated, meaning that the depositor is obligated to withdraw the $400 in cash and $400 according to the platform price (half of which is cash and the other half is via the bank card). This exposes the depositor to possible additional losses if the dollar exchange rate on the black market continues to rise, which is actually likely. Today, it has exceeded the price of 14150 pounds to the dollar, while the exchange rate of the exchange platform is stable at 12000 pounds.
Another point absent from the circular is to clarify whether the decision to stop benefiting from the circular belongs to the depositor only after he initially agreed to apply the circular. Meaning, if the depositor decided, after starting to apply the circular, to stop benefiting from it before a year has passed, and before drying up his sub-special account, can he do that? The circular did not clarify the matter, and this part carries risks associated with the owners of small deposits. If they are obligated to continue withdrawing, their accounts will be drained of liquidity and will therefore be closed. This brings us back to several warnings that the main objective of the circular is to dry up and close the accounts of small depositors (see “cities”).
In Article 11 of the circular, the Banque du Liban reminds that it is working with this decision as of June 30, and conditions are applied for a period of one year, subject to change or renewal, and it remains in force until the release of all funds transferred to the special branch account, i.e. $50,000 or less. Meaning that all depositors whose deposits are less than 50 thousand dollars can withdraw it according to this circular. These are the ones whose accounts will be closed according to what the banks plan. It must also be noted that if the depositor wants to withdraw from his remaining funds in his accounts outside the special branch account, during the period of validity of the circular, he cannot withdraw from it according to the price of 3900, but according to 1500 pounds to the dollar.
Another issue that cannot be bypassed is that if the Capital Control Law is issued, it will inevitably stop working with this circular, even if it has already been implemented. What are the political and monetary authorities planning for their mis-coordination, or perhaps from coordinating them hidden from the owners of the right, ie the depositors?
Circular 158 also enshrines the process of using the mandatory reserve funds. The Banque du Liban estimated the cost of implementing the circular at $2.5 billion annually, which it finances as follows: $1.25 billion from the mandatory reserve, and $1.25 billion from the funds of banks formed abroad in correspondent banks. This is what makes us revolve in the same cycle that requires the depletion of the mandatory reserve without any plans or a banking reform program or restructuring the sector.
The process of applying the circular may contain other details and loopholes that have not been addressed. However, it remains safer for depositors to scrutinize any document or document that is imposed on them in the bank, whether in application of this circular or otherwise, and to consult a lawyer if necessary, before signing, to avoid falling into the trap of banks that have succeeded in setting it up for thousands of depositors.