Total bank deposits of the Lebanese banking sector have declined by more than $30 billion over a 13-month period ending in September 2020, Byblos Bank announced.
That drop in aggregate private sector deposits, according to the bank, is largely due “to the repayment of loans, to the hoarding of cash at households, to banks and companies paying their foreign obligations, and to deposit outflows.”
Central Bank governor Riad Salameh said on Wednesday that approximately $10 billion in cash are believed to be stored in households of Lebanese citizens, and this might be one of the main reasons behind the decline in deposits in the market.
The deterioration of the capital’s currency started during the blow-up of the anti-establishment protests in October 2019, driving banks to apply strict capital control that is, nonetheless, illegal.
However, the Lebanese parliament has failed to pass the capital control law, which Is still waiting for the parliament’s approval, although it is one of the main conditions of the International Monetary Fund to lend Lebanon financial support.
Byblos Bank’s report added that the dollar figures are based on the official exchange rate of the Lebanese pound to the US dollar, while the report gave no reason behind the sharp decline in assets and deposits in this 13-month period.