American Express slashes credit limits of Lebanese cards amid economic turmoil

The decision to reduce credit limit and cash advances comes as lenders in the country enforce capital controls

epa07984991 Lebanese students from various schools wave national flags and shout slogans during ongoing anti-government protests at al-Nour Square in Tripoli, north of Lebanon, 09 November 2019. Protesters demand the president make parliamentary consultations immediately to facilitate the formation of a new government that replaces the recently resigned Cabinet. They also demand the formation of a technocratic government with no political affiliation. Saad Hariri resigned as Prime Minister on 29 October, bringing down the entire Cabinet.  EPA/WAEL HAMZEH
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American Express, the global payment and travel company, reduced the credit limit and cash advances of customers with cards issued in Lebanon, as the Arab country faces its most dire economic crisis since the end of its civil war in 1990 and lenders limit capital outflows.

Amex customers either found out that their credit limits were reduced once their monthly statements were issued or received a notification by email as their statement was being issued. There was no prior notice from the firm, some of the company's clients in Lebanon said.

A long-time customer who requested anonymityenquired why their credit card limit was reduced by about $1,300 (Dh4,771) and was told by the company's regional call centre in Bahrain that the decision was neither personal nor reflective of their credit status with the company.

The call centre said a management decision was taken concerning cards with resident addresses in Lebanon. The client said the customer service representative did not provide further details.

Amex's head of digital & marketing for the Middle East, Paul Mampilli, did not address specific questions from The National as to why the company decided to reduce credit limits.

"We understand that our customers in Lebanon may be facing some challenges in [the] market at the moment, however, we are always available to help [and] work out the best resolution for our card members in the current situation," Mr Mampilli said in an email, without specifying if defaults prompted a reduction in credit limits.

"We regularly review our lending policies [and] we are constantly in touch with our card members to inform and help them manage their finances," he said.

The measures by Amex follow individual curbs by Lebanese lenders on bank withdrawals and access to foreign currency as the country faces its worst financial crisis since the end of its 15-year civil war and pressure mounts on its local currency's peg to the US dollar.

The currency which is pegged to the US dollar at 1507.5 lost 19.4 per cent of its value against the greenback in Beirut's black market, according to Friday trading values.

In a statement on Saturday, the head of the Association of Banks in Lebanon, Salim Sfeir, said that depositors' money was "well-preserved and there is no need to panic", after a meeting at the presidential palace.

Lebanon's central bank governor Riad Salameh is due to hold a press conference on Monday, according to the state-run National News Agency.

The worsening economic climate culminated in more than three weeks of protests across one of the most indebted countries globally.

Citizens have demanded reforms and changes in the political system that has governed the country for three decades.

They blame Lebanon’s political elite for widespread corruption and nepotism, which they say contributed to the country accruing $86 billion (Dh315.8bn) of public debt equivalent to 150 per cent of gross domestic product.

The social unrest and protests are the largest the country has seen since the assassination of former prime minister Rafic Hariri in 2005, which led Syria to withdraw its troops from the country after a 29-year presence there.

The country saw an outflow of capital estimated at about $3bn in the first nine months of the year.

Capital inflows, largely in the form of foreign direct investment and non-resident deposits, slowed sharply in the past 18 months, leading to a significant decline in official reserves and the emergence of a black market, the Institute of International Finance said.

Both Moody's Investors Service and Fitch Ratings cut the ratings of Lebanon and its banks further into junk territory, on the back of the deteriorating economic climate, which led to the resignation of Saad Hariri as prime minister last month.

Earlier this month, Lebanon's central bank governor instructed lenders to raise their capital by 20 per cent in two phases by June of next year and, for the first time, ordered them to halt distributing dividends.

Amex is targeting single-digit revenue growth in the Middle East this year, as it boosts its merchant partnerships and launches new products and services, Mazin Khoury, chief executive of American Express Middle East, told The National in a June interview.

Corporate spending worldwide is forecast to rise in 2019, according to the preliminary findings of Amex’s 2019 annual Global Business & Spending Outlook for Mena.

Mr Mampilli declined to specify how much Lebanon accounts for the company's overall Middle East business.