At its peak, the banking sector represented three times the GDP of Lebanon, with deposits totaling more than 150 billion dollars (about 131 billion euros).

Loans with advantageous interest for housing, the purchase of cars or travel contributed to the success of the banks, which were then a national pride.

But with the worst economic crisis that this small country of six million people has known for more than a century, everything came crashing down.

Starting with the volume of loans, which increased from 59 billion dollars in 2018 (51.9 billion euros) to 29.2 billion dollars (25.6 billion euros) at the end of 2021, calculated at the official exchange rate of the Lebanese pound, according to the Association of Banks of Lebanon (ABL).

Another consequence is that banks have imposed restrictions on foreign currency withdrawals and prevented money transfers abroad.

These measures have limited access to accounts, particularly in US dollars.

And clashes between angry customers wanting to withdraw their savings and employees applying the instructions in force have become frequent.

"Zombie Banks"

Today, notes the investment banker Jean Riachi, "the Lebanese banks have almost no more banking activities, so they are forced to reduce their operations".

A vandalized ATM in Beirut, February 18, 2022 ANWAR AMRO AFP

Because most of their income came from "interest they received from the state and the central bank," he said.

The same goes for analyst Patrick Mardini, who drives the point home: the Lebanese banking sector is made up of "zombie banks" and restructuring is "inevitable".

The new reality has shaken the confidence of customers in their banks, which have been "forced to adapt to the contraction of the economy, in the face of the inaction of the Lebanese State", observes the ABL.

As a result, the number of bank branches fell from 1,081 at the end of 2018 to 919 at the end of November 2021.

In addition, the number of employees in the banking sector fell from nearly 26,000 at the end of 2018 to some 20,000 in November 2021, a reduction of around 23%, according to the ABL.

Despite the country's unprecedented social and economic decline, the Lebanese leaders decried by the population have still not initiated the necessary reforms or made public an economic rescue plan in accordance with the demands of the international community from which they have asked for aid.

The Lebanese State defaulted on its sovereign debt in 2020, a first in its history.

"Abandoned Country"

"Lebanon is an abandoned country," ABL president Selim Sfeir told AFP.

More than two years have passed without any reaction from the state to redress the country, while the losses continue to accumulate, he said.

A cyclist passing in front of a closed bank branch in the Lebanese capital, Beirut, on February 18, 2022 ANWAR AMRO AFP

Formed in September 2021, the current government of Prime Minister Najib Mikati assessed losses in the financial sector at 69 billion dollars (60 billion euros) before starting negotiations with the International Monetary Fund (IMF) in January 2022. .

In mid-February, the IMF presented a detailed roadmap for Lebanon and underlined "the unprecedented scale of financial sector losses which should be dealt with in a transparent way (...) by protecting small savers".

The monetary institution called for "rebuilding this sector and removing the bank secrecy law".

For the moment, a blur reigns over the fate of the country's banks, but for the governor of the Central Bank, Riad Salamé, "the ability to lend to the market" will be one of the determining factors.

Customers have nothing to do with the fate of the banks: "I want to recover my savings at all costs," says Hicham, a Franco-Lebanese businessman who did not wish to give his name.

For him, "the situation in this sector is incomprehensible. All the parties concerned must assume their responsibilities in this crisis".

© 2022 AFP