ABL: Strong Objection to the Draft of the Financial Gap Law
In its official statement dated 21 December 2025, the Association of Banks in Lebanon (ABL) expresses strong and explicit opposition to the draft law presented to the Council of Ministers concerning the financial gap and the treatment of depositors’ funds. The Association argues that the proposed legislation contains provisions and measures that are fundamentally flawed in both substance and methodology, as they diverge from internationally recognized legal and financial standards applied in the resolution of banking crises in other countries. According to the Association, these deviations place depositors’ rights at risk rather than safeguarding them.
The Association emphasizes that any credible legal and financial approach to resolving the crisis must begin with an accurate and transparent assessment of the so-called “financial gap,” particularly the gap attributed to the Banque du Liban. Such an assessment, the statement argues, requires detailed accounting based on internationally accepted standards, realistic financial simulations, and a clear distinction between the actual size of losses and the true market value of non-performing assets. The Association contends that the draft law fails to meet these requirements and instead clearly leads to the stripping of banks’ shareholders’ equity and the imposition of losses in the manner of the Hierarchy of claims as outlined under Law 23/2025, ultimately resulting in the erosion of depositors’ funds.
Furthermore, the Association rejects the measures and solutions proposed in the draft law on the grounds that they do not take into account the actual capacity of banks to meet their obligations toward depositors. It stresses that banks cannot be placed in direct confrontation with depositors while the state continues to evade repayment of its debts to the Banque du Liban and refrains from addressing its fiscal deficit. The statement also highlights that the draft law ignores Banque du Liban’s substantial assets – exceeding USD 70 billion – while noting that even a limited liquidation of a small portion of these assets, amounting to no more than USD 10 billion, could allow for the immediate and full repayment of small depositors’ funds. This, according to the Association, would be a fairer alternative to forcing depositors and banks to bear losses caused by the combined actions of the state and the central bank, in a clear contradiction to legal just responsibilities.
The Association maintains that sustainable economic recovery and any effective restructuring of the banking sector are impossible without rebuilding trust in the financial system. Such trust depends on the state’s commitment to its legal and contractual obligations and its willingness to repay its debts, rather than continuing to default on them.
In conclusion, the Association warns that confidence in the banking system cannot be restored through measures that target banks retroactively or impose irreversible burdens on them without providing a clear path for recapitalization. According to the statement, such approaches would inevitably undermine depositors’ rights and expose Lebanon’s financial and monetary stability to additional risks. The Association therefore reiterates that genuine reform must be grounded in accountability, transparency, and adherence to legal norms, rather than policies that deepen the crisis and prolong instability.
