Lebanon’s Bank Audi says UK court order means unequal treatment for savers

© Reuters. FILE PHOTO: A worker cleans the logo of Bank Audi in Beirut, Lebanon November 1, 2019. REUTERS/Mohamed Azakir

BEIRUT (Reuters) – Complying with a London court order requiring Lebanon’s Bank Audi and SGBL to pay a depositor $4 million of money stuck in the nation’s crisis-hit banking sector would mean treating savers unequally, a Bank Audi official said on Wednesday.

The High Court of Justice, Queen’s Bench Division, ordered Bank Audi and its peer SGBL on Feb. 28 to make the payments, amounting to about $1.1 million and $2.9 million respectively, to claimant Vatche Manoukian by March 4.

Most savers have been frozen out of their hard currency accounts since Lebanon descended into a major financial crisis in 2019 that has sunk the currency by 90%.

The government has referred a draft capital control law to parliament but it has yet to be passed. This has led to unequal treatment of savers by banks that have given some clients access to their dollars while denying others.

Bank Audi intends to abide by the UK order prior to the expiration of the deadline, but will consider its options on whether to appeal, the official said.

The order means “wealthy depositors who happen to be resident in the United Kingdom being able to be paid 100% of their funds out of the pockets of the remaining depositors who do not have the right or ability to bring proceedings overseas”, the bank official said.

“This will significantly reduce the money available to the other depositors,” the official said.

A lawyer for Manoukian said the decision acknowledged his client’s “legal right to transfer his money out of Lebanon”.

“This is the first case relating to the Lebanese financial crisis to be successfully brought in the UK. This decision is likely to be of interest to other English and EU domiciled individuals with funds held in Lebanese banks,” the lawyer, Graham Shear, said in an emailed statement.

“Any further delays in enacting capital controls and a comprehensive reform plan will lead to additional harm, creating further unequal treatment,” the Bank Audi official said.

SGBL has not responded to emailed requests for comment.

Approval of a capital control law is widely seen as a requirement for Lebanon to make progress in talks with the International Monetary Fund towards a financial aid package.

Lebanon’s Bank Audi says UK court order means unequal treatment for savers

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