Lebanese bank AM Bank suspends banking association membership after IMF criticism

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A damaged AM Bank ATM is pictured, a day after protests targeting the government over an economic crisis in Beirut, Lebanon October 19, 2019. REUTERS/Mohamed Azakir

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BEIRUT, June 24 (Reuters) – Lebanese bank AM Bank on Friday suspended its membership of the country’s banking association over decisions “harming the banking sector” days after the association criticized a draft agreement by the IMF with Lebanon in a letter that many member banks were unaware of.

AM Bank said in a statement that its decision was based on frequent “inappropriate decisions at the ABL”, the latest of which was a June 21 letter from an adviser of the Association of Banks of Lebanon (ABL) to the IMF. in which she called the terms of the IMF agreement with Lebanon “illegal” and “unconstitutional”.

Lebanon’s government reached a staff-level agreement (SLA) with the IMF in April that pledges $3 billion in funding over four years to help the country recover from a financial meltdown that saw its currency lose more 90% of its value.

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A full deal is conditional on Lebanon implementing a series of measures, including starting to restructure its banks which have blocked the majority of depositors from their hard currency savings since the 2019 financial implosion.

AM Bank has called on other banks to follow suit by suspending their membership in order to send a message to ABL management that “enough is enough”.

A spokesperson for the ABL did not immediately respond to a request for comment.

While a number of banks, including Bank Audi and AM Bank in Lebanon, said they disagreed with ABL’s letter, Lebanese banks have largely opposed the fundamental principles of the agreement with the IMF, which calls for limiting the use of public resources to fill a hole of about 70 billion dollars in the financial system.

A government plan drawn up in concert with the IMF calls on banks to be the first to bear the losses of the financial system, wiping out their capital.

Banks have instead called for using state assets to fill the gap, citing decades of wasteful spending by successive governments.

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Reporting by Maya Gebeily and Timour Azhari; written by Lina Najem; edited by Jason Neely and Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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