Lebanon's banks suspend open-ended strike for a week

Commercial banks have been on strike since February 7 to protest against legal action against them

A vandalised ATM outside a Fransabank branch in Beirut. AP Photo

Lebanon’s banks have temporarily suspended a nationwide strike for a week, the country's Association of Banks announced on Friday, alleviating a nearly three-week strike that drew significant ire from depositors and during which the nation’s currency plummeted even further.

“Based on the Prime Minister's wish, the banks' sensitivity to difficult economic conditions, and the need to secure banking services to all citizens at the end of the month, [the Association of Banks in Lebanon] have decided to suspend the strike temporarily for a week,” a statement on the association’s Twitter account said.

The decision comes after comments by caretaker Prime Minister Najib Mikati on Tuesday night, in which he promised the bank strike would end “within 48 hours”.

Commercial banks went on strike in early February to protest against legal actions taken in recent weeks: the first, when Mount Lebanon public prosecutor Ghada Aoun announced money-laundering charges against senior officials of several banks; and the second when judgments by the Court of Cassation ruled against Fransabank in favour of two depositors seeking to access their foreign currency deposits.

Banks were also protesting against the failure of parliament to enact formal capital controls in the more than three years since Lebanon’s financial crash.

In the absence of an official capital control law, the nation’s commercial banks imposed informal controls that prevent depositors from transferring money abroad and which severely limit money withdrawals.

The measures imposed have resulted in the implementation of de facto haircuts against depositors, who are forced to withdraw limited amounts of money at unfavourable exchange rates that devalue their withdrawals' worth.

Depositors reacted with anger over the open-ended bank strike, during which all services except ATMs were halted.

The suspension of the strike has been timed to coincide with the end of the month, which will permit banks to process salaries for the nation's embattled public sector employees.