Lebanon banks association rejects draft govt financial plan

Lebanon banks association rejects draft govt financial plan

BEIRUT- Lebanon's banking association on Monday rejected a draft government plan for tackling the country's financial crisis that proposes a haircut and partial bank bail-in on savers, saying it would cause a long loss of confidence in the financial sector.

A draft of the plan to plug a huge hole in the financial system, seen by Reuters last month, forsees returning just $25 billion out of a total $104 billion in hard currency deposits to savers in U.S. dollars.

Most of what's left would be converted to Lebanese pounds at several exchange rates, including one that would wipe out 75% of the value of some deposits. It estimates losses in the financial sector at $69 billion and sets a 15-year timeframe for paying back all depositors.

"This hypothetical draft plan indicates it can eliminate the so-called "losses" in order to balance the books. This approach... is a liquidation approach and will lead to a persistent loss of confidence for generations to come," the Association of Banks in Lebanon (ABL) said in a written statement to Reuters.

The ABL's approval is not required in order for the government to adopt and begin implementing the plan, but experts say support from the banking sector could contribute