Thus, the safety of banks wasted depositors’ dollars

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$ 49.3 billion is the value of people’s “hidden” money from the Banque du Liban. Riad Salameh’s famous sentence, “Deposits are Good”, turned into a joke after the financial and monetary collapse. His words suggest that the money is guaranteed with the custodians of it, while it is “vaporized”. It did not happen due to “chemical friction”. Rather, the responsibility lies with the central bank and banks, which gambled the people’s money. Public debt payments, generous interest on deposits and profits of bankers that have been transferred abroad, coverage of private bank losses, financing of the balance of payments deficit, smuggling of funds of large depositors abroad … are some of the outlets through which people ‘dollars’ have evaporated.Raef, a Lebanese citizen working abroad. A few years ago, he opened a bank account in one of the “most important” Lebanese banks, and deposited $ 100,000 in it. Raif thought that in this way he would leave “insurance” for his family, benefiting from him on the “Black Day”. Since the account was opened, the family has never initiated a penny from it, but after the outbreak of the monetary and financial crisis, it tried to withdraw an amount … it did not work. Banks did not justify the reason for the action, for Raif and other depositors (except for the 1% class that holds the majority of deposits). Another customer deposited the year 2018 with $ 100 million in a bank, which after a year became $ 108 million, as a result of the high interest. With an unproductive economy, and the Lebanese banks ’job turned to“ gambling ”instead of investment, the interest amount was paid from a Raif account and the rest of the depositors. After Riyad Salama launched its financial engineering, interest on deposits in dollars exceeded the 14% threshold for some banks, which entered into speculative terms between each other to attract money in foreign currencies. Those engineering began in 2016 to attract more deposits in dollars, and to absorb the surplus in Lebanese pounds with banks. Profits for one year from these operations amounted to $ 5.6 billion, which the banks and the big depositors took as immediate exceptional profits that they seized from the assets at the Central Bank, that is, the people’s money that the banks had invested in it. According to the information, the integrity of the engineering profits was paid to the banks in Lebanese pounds, which it transferred into dollars from depositors’ accounts.
Raif’s money (for example) was not just transferred to interest and profits. Upon depositing the amount, the bank would “withdraw it” to the central bank, because its governor, Riyad Salama, was offering him high interest. Where did the benefits come from? From the deposit itself. This means that the central “alliance” – the banks, put his hand on the depositors’ money, and disposes of them and circulates them within a closed loop that only the influential people benefit from their movement. When the treasury dried up, the banks stopped trading in foreign currency, and prevented people from withdrawing their dollars from their accounts, cashing checks, and receiving salaries. Deposits of people in foreign currencies are not present in banks. Evaporated? Rather, it was “evaporated.”
The shortage of dollars is considered “difficult” in a country like Lebanon, because its economy is based on remittances from abroad. The loss of the green currency from the market began, since 2011, when the balance of payments (the money entering Lebanon and those leaving it) flipped from surplus to deficit, which affected the ability of the Central Bank to stabilize the exchange rate of the lira, and thus the disappearance of dollars from people’s accounts. The economic and financial expert, Freddy Paz, told Al-Akhbar that the central bank was putting “3 billion dollars in circulation among people. After the pressure increased, it became necessary to pump larger sums, ”but there was no capacity to do so. For the first time, money in banks began to decline, with a high percentage of those who withdrew their full deposits or interest on them, low transfers from abroad, and pressing local and regional political conditions. In 2019, the “central” needed, according to estimates, approximately $ 16 billion to close the deficit with the outside (between importing and paying external debt securities). From where did he come in dollars in the absence of any material income to him, and since he owes the banks more than 68 million dollars, and does not have net reserves?
The waste gutters are numerous, and Baz mentions, among them, “the increased exposure of banks to the state from 28% to 75%.” His words mean that banks used the bulk of people’s money to lend to the state. She continued the policy of expanding the public debt, because she was benefiting from its benefits, despite its realization that the state is a “bad customer” and does not have the money to pay off the loan amount and the interest on it. “People’s money” was used to finance the deficit in the balance of payments, and to cover the expenses of the state. And Baz adds that the banking sector «was taking advantage of the money flowing from abroad. But suddenly the capital started coming out, without attracting new deposits. The total amount of withdrawals was approximately 10 billion and 600 million dollars.
In a paper prepared by the researcher Tawfiq Kasbar, and published by the Foundation for “Future House” in November 2019, it is reported that “the significant decline in assets and liquidity of foreign currencies for banks is an indication that it is transferring its money from the main correspondent banks abroad to lend to the Bank of Lebanon.” It goes without saying that this situation is considered by any unhealthy standard for banks and makes them vulnerable to the deterioration of public finances for the public sector, and here lies the greatest risk resulting from financial engineering (started in 2016) conducted by the Bank of Lebanon ». Banks reduced the total credit to the private sector by the equivalent of $ 12 billion (according to the unified balance sheet of commercial banks), but they lent to the public sector “71% of its assets, so its liquidity and financial conditions became fragile,” says Kasbar.

Banks at the Central Bank invested $ 84 billion in foreign currencies

The deficit in the citizens ’accounts, or“ national monetary wealth in foreign currencies, is one of the aspects of the current crisis, ”says former Minister Mansour Batesh. This has led to “a deficit in the banking sector, which has a private capital of $ 22 billion, and we also expect it to have evaporated.”
To start with, the total deposits with banks amount to 120 billion dollars, in addition to nearly 7 billion dollars that are created as a precaution for the decrease in private funds with banks. Battish explains that the latter hired at the Bank of Lebanon “84 billion dollars in foreign currencies, and borrowed 6.7 billion dollars from him, knowing that the central bank says it is 7, which means that the net money deposited is 77 billion dollars.” According to what is reported from the Bank of Lebanon, 22 billion dollars of it is left as liquidity, and 5.7 billion dollars of foreign debt securities. This means that $ 49.3 billion was “evaporated.” “This is if we assume that the number is accurate and not more than that,” says Battish, adding that the money was deducted from people’s revenues “to cover the deficit in the balance of payments, as a result of the deficit in the trade balance, and in the payment of benefits to non-residents that were withdrawn abroad, and the profits of the financial engineering that It was converted into dollars, and it paid nearly $ 10 billion in loans from banks abroad. This is the result of “the economic model based on import rather than production, that is, the rent that pays to sell livelihoods and exchange the dollar, while if we were to produce we would have earned the hard currency.”
What is the solution after losing people’s money? First of all, “we need absolute transparency.” The first solution that Tatesh proposes is to “reduce the interest on deposits to the maximum, and there is no risk to withdraw deposits with Capital Control.” Then the fiscal deficit and budget deficit must be whistled, and national production stimulated. ” Batish also proposes to expand the base of shareholders in banks and recapitalize them by converting part of the funds of large depositors into shares in them, which will be from the huge interest profits that they have achieved over the years. In addition, the deficit of current expenditures, including debt servicing, must be zeroed, and investment expenditures that generate growth and employment opportunities must be continued.


People’s money is “stolen” by major depositors
Banks and the central bank have not wasted dollars on depositors to pay off public debt, high interest on deposits, and import financing. In addition to these “expenses”, what is stated in the report of the Banking Supervision Committee (See “Al-Akhbar”, February 14, 2020) On the sale of banks by US $ 15 billion to large depositors, between December 31, 2018 and December 28, 2019, in order to be able to transfer a portion of their deposits from the lira to the dollar. In the same period, the actual decline in deposits amounted to about 27 billion dollars, 98% of which was made by the richest depositors in banks. The former minister, Mansour Batesh, explains that the $ 27 billion “is the decrease in the amount of deposits, both original and interest, in 2019. The original amount is $ 16 billion, and the benefits are $ 11 billion. Of that, about 8 to 9 billion was disbursed to pay off debts. While it was deposited in homes between 4 – 5 billion. We estimate that $ 5 billion has been allocated for import. To remain 11 billion are remittances abroad, half of which took place before October 17 ». From where did the banks sell $ 15 billion to its top depositors? It was stolen from “depositors’ ”accounts, who were subject to withdrawal restrictions, up to a limit of $ 50 per month!

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