Salam vows accountability and full funds return as cabinet approves banks law

After Cabinet passed a long-awaited banking draft bill that would distribute losses from the 2019 economic crisis amid objections from nine ministers and modest protests, Prime Minister Nawaf Salam appeared a bit agitated as he answered journalists' questions.

The law stipulates that each of the state, the central bank, commercial banks and depositors will share the losses accrued as a result of the financial crisis.

Depositors, who lost access to their funds after the crisis, will be able to retrieve all their money, with a limit of $100,000, over the course of four years. The wealthiest depositors will see the remainder of their money compensated by asset-backed securities.

"Bonds have a value," Salam assured the journalists. He said the law is not perfect and has some shortcomings. "It does not meet everyone's aspirations -- not even mine, but the most important thing is that it is realistic."

"85% of the depositors (Those who have $100,000 in their bank accounts) will receive their funds in full. The remaining depositors will also receive their funds, but not as quickly," Salam said. "The bonds are not mere promises on paper; they are backed by $50 billion from the Central Bank's assets."

The financial gap law also stipulates accountability, Salam said. It means that politically exposed persons and major shareholders who transferred significant capital outside the country from 2019 onwards -- while ordinary depositors were deprived of their savings -- must return them within three months or face fines.

"We will carry out a forensic audit and hold those responsible to account," the PM said.

The draft law is a key demand from the international community, which has conditioned economic aid to Lebanon on financial reforms.

The draft will be sent to parliament, where it could be blocked.