Ten Lebanese banks filed through their lawyers a Memorandum to ‘Tie-up Litigation’ with the Government, addressed to the Ministry of Finance. The memorandum demands that the government pays its USD loans and obligations back to BDL, so that the latter can pay banks their deposits (with BDL). As such, banks can then pay customers back their deposits.
The memorandum was based on an analysis of BDL balance sheets and income statements; and the results of the forensic audit by Alvarez and Marsal (AM) of BDL; in addition to the audit by Oliver Wyman, as requested by the government.
The memorandum also stated the losses at BDL and how banks’ deposits at BDL, accumulated voluntarily but mostly involuntarily though BDL regulatory circulars, were spent by the Government. As a result, banks’ main demands were pointed out as follows:
As important, the memorandum maintained that in case the government doesn’t meet the banks’ demands, then banks will have resort to the courts to make the government pay back its obligations.
It is interesting that most, if not all Lebanese banks, are expected to join in the memorandum, in addition to ABL itself. The banks’ main claim is that BDL losses are not their responsibility but it is the government’s responsibility; and as such, banks need to protect themselves and rightly so, if new laws on bank restructuring assumed otherwise, especially given the huge losses and that their ‘survival’ is at stake.