Despite the drop in the value of the Lebanese pound against the US dollar that those crises have induced, the Lebanese Central Bank has refused to change the official exchange rate. Resulting in the development of two parallel exchange rates: (i) the Sayrafa rate set by the Lebanese Central Bank at 24,900 LBP per 1 USD till date; and (ii) the market rate that varies on daily basis.
An informal payment system has been in place, distinguishing between pre-crisis dollars and post-crisis “fresh” dollars.
Faced with the inaction of the authorities, depositors have resorted to Lebanese and foreign courts, and have brought a significant number of lawsuits against local banks in an attempt to compel them to execute international bank transfers, and/or demand payment of outstanding amounts at their actual value.
The Lebanese banks’ response to these lawsuits was to either:
- Refuse to execute the transfers and instead provide their clients with cashier’s cheques;
- Close the clients’ accounts and request to pick up a cashier’s cheque from the bank; or
- Close the clients’ accounts and deposit a cashier’s cheque via notary public.
Term Suspension Laws tallied along strikes of the judiciary, as well fuel and financial crises etc. with the compounded effect of stalling the courts' activities and substantially delaying the issuance of final decisions in the lawsuits filed against Lebanese banks.
We will be covering all of the above topics and much more during the webinar.
