Lebanese Banking Crisis- Closure of Lebanese Branches in Cyprus- Are You Affected?
According to the recent reports, following the decision of the Central Bank of Lebanon, the Lebanese banks will be closing their branches in Cyprus.
Lebanon is going through a severe economic crisis and as a result, Lebanese bank branches are expected to close in Cyprus. There are nine branches in Cyprus and two of those have already closed in the past.
Under the “Deposit Guarantee and Resolution of Credit and Other Institutions Scheme” in Cyprus, the maximum amount of compensation, per depositor, per credit institution is €100.000, including accrued interest. This limit applies to the aggregate deposits held with a particular credit institution. When calculating the amount of compensation payable to a depositor, the deposits are set off with all kinds of counterclaims that the credit institution has against the depositor (e.g. loan installments or other credit facilities) provided these have fallen due and in respect of which such a right exists.
In order to eliminate the effects on the Cypriot Banking system, The Central Bank of Cyprus (CBC) placed measures in November 2019 to impose a limit on the amount of savings in Lebanese banks in Cyprus that would qualify for the deposit guarantee scheme, and in 2020 CBC required Lebanese bank branches to transfer an equal amount of funds to CBC to cover the deposits guaranteed under the scheme.
It is expected that this new development will not affect the remaining Cypriot Banking system.
If you are a holder of an account in a Lebanese Bank, please do not hesitate to contact us to discuss your options on how to approach the matter.
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