After the Banque du Liban and the Supreme Banking Authority deliberated on some banks, the first of which is Al Baraka Bank and Federal Bank, and the dissolution of their boards of directors and the appointment of an interim manager for each of them, the patience of depositors of Al Baraka Bank and Federal Bank began to run out. After 3 years of withholding their deposits, the Banque du Liban dissolved the management of the two banks without any assurance or clarification of their deposits.
The first objections to the lack of interest in relations with the rights holders were manifested with the assault on the depositor bank of the Al Baraka Bank branch in Hamra last week, and it is not excluded that this incident is repeated against the two aforementioned banks . What is the fate of depositors in these two banks? Does their fate intersect with depositors in other banks? Above all, how are deposits managed in the event of liquidation of the two banks?
temporary stage
What the Banque du Liban has done to Al Baraka Bank and the Federal Bank is a preliminary step in acknowledging that this administration is faltering, and this is one of the procedures before closing the bank after verifying that the bank’s financial situation is not sound. This requires, according to legal expert and jurisprudence chief executive Sabine Al-Kik, appointing an interim manager, freezing all future operations of the bank, halting any new transactions, not receiving new depositors and failure to fulfill new obligations. The process of conducting the bank’s business is limited to the necessary operations without incurring new charges, but the two banks continue to open their doors to customers.
Payment to depositors will normally continue with the same mechanism as before the dissolution of the board of directors, but under the supervision of the new director, pending a thorough examination of his financial situation, and an appropriate decision on the matter, both by part of the Banque du Liban and the Supreme Banking Authority or by the court, says Cake in an interview with “Cities”. The result remains the same, which is that the affected bank is unable to continue as it is. In other words, the two banks are now in a transitional phase, awaiting a definitive solution for them, through their reactivation or liquidation.
fate of depositors
The fate of depositors varies depending on the fate of the bank. In other words, it is difficult to determine their fate before making the final decision on the bank, after having assessed the situation by the interim manager. Al-Kik clarifies that there is a difference between the central bank’s self-liquidation or total takeover and its liquidation, merger or otherwise. According to Al-Kik, the worst option remains to entrust the Banque du Liban with the liquidation process of the two banks, as evidenced by the ambiguity surrounding the Banque du Liban’s procedures towards the two banks.
From here, the concerns of depositors increase. Therefore, the cake advises them to go to the judiciary to preserve their rights later, and says that this step, even if it comes late, is still better than not. Whatever the fate of the bank, the rights of depositors remain with the bank, not with the Banque du Liban. And if it is later found that the bank will not be able to pay deposits to depositors at all, the lawsuits will be against the bank and its board members and will hold them personally liable, sole guarantor. Al-Kik stresses that the process of subsequent assumption of liability between the banks in liquidation on the one hand and the Banque du Liban on the other hand, regarding the evasion of depositors’ liability, is underway. Hence, rights must be preserved in lawsuits.
Concerning Al Baraka Bank, and after information about serious abuses by the management of Al Baraka Bank in Beirut, and Bank of Lebanon has agreed with the parent management of Al Baraka Group (Bahrain) to dissolve its board of directors in preparation for its subsequent liquidation, Al-Modon learned that the management of the Al Baraka group in Bahrain is working to crystallize a way out that would mitigate the loss of depositors, “in the interest of the interests of customers who have no fault on their part, and its reputation as a wide-ranging group in more than one country.” The source confirms that the group’s management will not hesitate to prosecute those responsible for the achievements of Al Baraka Bank in Beirut, both from inside and outside the bank.
