© 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 court 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.
Savers have largely been frozen out of hard currency deposits in the banking system since Lebanon collapsed into a devastating financial crisis in 2019.
Bank Audi intends to comply with the UK order before expiration of its deadline, but will consider its options on whether to appeal, the official told Reuters, adding that the ruling underlined the need for a capital control law.
Beirut has not introduced such a law since the crisis erupted, resulting in unequal treatment of savers.
Deputy Prime Minister Saade Chami said he hoped a draft law that has been with parliament for some time would be approved soon.
“There is a renewed push to pass the capital law, even before the latest court ruling, because it is highly needed,” he told Reuters.
The Bank Audi 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”.
“This will significantly reduce the money available to the other depositors.”
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.
SGBL has not responded to requests for comment.
A capital control law is a requirement for Lebanon to make progress in IMF talks towards an aid package.
The Bank Audi official said: “Any further delays in enacting capital controls and a comprehensive reform plan will lead to additional harm, creating further unequal treatment.”
Lebanon’s Bank Audi says UK court order means unequal treatment for savers
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.