The Lebanese Parliament in its meeting on July 31st, 2025 voted and passed the law of banks restructuring in Lebanon. The law was issued after some amendments done by the Finance and Budget committee in the Parliament (details of the law are present in the article titled “A Brief on the New Bank Restructuring Law”). After the issuance of the law, the International Monetary Fund (IMF) had more than 20 comments on the issued law. 6 of these comments were main comments while the remaining were technical ones. In this economic digest, we will be talking briefly on the amendments recently tabled by the Ministry of Finance and approved by the Lebanese Council of Ministers.
Lebanese Ministry of Finance preformed some adjustments to the Banks’ Restructuring Law as per IMF comments. The main modifications are as follows:
- Removing article #37 that states that the banks’ restructuring law will be put on hold until the issuance of the financial resolution and deposit recovery law.
- Adding in article #13 statements that emphasize on the principle of the hierarchical distribution of losses. The losses include first the bank’s shareholders and the bank’s own funds. The Central bank is authorized to issue circulars regulating the use of reform tools and deleting any restrictions on the application of this article and linking it to the Financial Regulation Law.
- Adding to the article #26 a clear paragraph related to the hierarchical distribution of losses that stress on the starting with the bank’s shareholders and the bank’s own funds and consider a depositor’s accounts at all banks as one deposit.
- Mentioning the 4 main goals of the law, that do not contradict with Credit and Money law:
- Improving the stability of the financial system
- Insure the continuity of the main operations of the banks
- Protecting deposits in the liquidation and reform process
- Stop using public money through the banks’ reform process
- Removal of the representative of National Deposit Insurance Corporation from the membership of the second room of the Higher Banking Commission (HBC). Also adding a statement stating that the economic expert should be independent of any governmental or banking front.
- Emphasis on independence and avoiding conflicts of interest in appointing members of the first and second chambers of the Higher Banking Commission (HBC).
- The Banking Control Commission (BCCL) appoints the independent evaluators.
- The HBC has been granted exceptional authority to make the final decision in the evaluation process, upon which a decision will be made regarding the reform or liquidation of the bank. The final decision will be based on a report from the Banking Control Commission, in case the bank’s situation requires urgency.
- Banks can no longer appeal the decision of the HBC in front of courts after adding a statement revealing that “In the event of the bank being put under reform or liquidation, any review or appeal before the special court or any other authority”.
- Removing from article #14 the following statement “Depositors are protected in accordance with what is determined in the Deposit Regulation and Recovery Law, which allows for the restoration of financial stability”.
- Cancelling any role for the bank’s general assembly that contradicts with the HBC decisions
- Removing one of the authorizations of the HBC, being “enforce the return of any funds transferred to other parties in a discriminatory or unfair manner”.
- Adding a statement in article #32 makes this law superior to all laws that contain articles that conflict with it, i.e. the articles of this law are applied, and all provisions of other laws that conflict with it are ignored.
- Adding in article #36 a statement that imposes the application of international standards for measuring capital adequacy and liquidity in accordance with what is determined by the monetary authority, i.e. the monetary authority determines the minimum phases according to these standards and the upper ceilings and deadlines for their application.
