Business · Companies · 13 hrs ago
Lebanon court ruling reshapes bank reform and deposit recovery
Lebanon’s Constitutional Council struck down part of a bank reform law after President Joseph Aoun challenged it.
The decision restores a central role for the Bank of Lebanon in restructuring banks and could shape a separate law on financial losses and deposit recovery.
Lebanon’s banking collapse has left about $80 billion in deposits locked away, while the government, central bank and banks disagree over who should bear the losses.
The council rejected making depositors carry the costs alone and said the state and central bank also have responsibility.
The ruling may complicate efforts to reach an agreement with the International Monetary Fund, which is linked to laws addressing the banking crisis and financial losses.
A preliminary deal may take longer, as Lebanon also needs to pass next year’s budget and adopt a medium-term plan for managing public debt.
Parliamentary committees are expected to begin discussing the financial-gap law soon, but depositors’ rights remain unresolved until legislation sets out how their savings will be handled.
Lebanon’s Constitutional Council annulled Article 3 of the bank reform and restructuring law after an appeal by President Joseph Aoun.
The ruling returns the central bank to a central role in managing bank restructuring and may affect plans to recover deposits.
It also raises questions about how losses will be divided among the state, the central bank and commercial banks.
The article says the ruling rejects making depositors alone bear the cost of the financial losses.
Depositors’ rights remain unresolved, with their trapped savings estimated at about $80 billion.
- Who
- Lebanon’s Constitutional Council ruled on the provision. President Joseph Aoun had appealed it.
- What
- The council annulled Article 3 of the bank reform and restructuring law, affecting the approach to bank restructuring and deposit recovery.
- When
- The article was published on October 21, 2026. The ruling date is not stated.
- Where
- Lebanon.
- Why
- The council acted in response to an appeal by President Joseph Aoun. The ruling also concerns the legal framework for addressing the financial crisis and allocating losses.
International Monetary Fund and government approach
Constitutional Council ruling and depositor-rights position
Use of public funds
International Monetary Fund and government approach
IMF guidance, supported by the government’s approach in the draft bill, seeks to limit the use of public funds in bank reform.
Constitutional Council ruling and depositor-rights position
The ruling emphasizes responsibility for the crisis on the part of the state and the central bank, and rejects placing the losses solely on depositors.
Law No. 23 was issued, setting rules for bank reform and restructuring.
Asharq Al-Awsat reported that the Constitutional Council had annulled Article 3 after President Joseph Aoun’s appeal.
- Annulled provision
- Article 3 of Lebanon’s bank reform and restructuring law
- Appeal
- President Joseph Aoun
- Deposits
- About $80 billion
- State borrowing
- About $64 billion
- Banks’ placements at the central bank
- A similar amount to the deposits in question
4 sources
What people are saying
the state and the central bank bear responsibility for the financial crisis