Written by Aline Barakat for JNews Lebanon
Financial circles have recently been abuzz with reports indicating that certain Lebanese banks have gradually begun recording profitable financial results, following years of depleted balance sheets, lost capital, and the total paralysis of traditional banking mediation. At first glance, this news might appear to be a positive indicator of recovery. However, the fundamental and alarming question raised by experts and observers is not whether banks have returned to profitability, but rather: How was this profitability achieved, and at whose expense?
Read also Exclusive- The “Framework Accord” Hanging in the Balance: Red Lines Prevent Internal Strife
The Architecture of “Offloading Liabilities”: A Hidden Haircut Under Official Covers
An in-depth accounting analysis by JNews Lebanon confirms that these financial results cannot be read in isolation from the distorted structure of post-crisis bank balance sheets. A major portion of the apparent improvement in profitability does not reflect a healthy return to traditional banking activities (such as lending, investing, and generating organic value). Instead, it is the direct outcome of a systematic process of shedding liabilities—specifically, the banks’ obligations to their depositors—through mechanisms that slash the real economic value of deposits.
The Warped Accounting Equation: When a depositor is forced to withdraw their funds at an artificial rate of 15,000 LBP per Dollar, while the official exchange rate at Banque du Liban stands near 89,500 LBP, this staggering gap does not merely represent a passing exchange rate loss. From a financial perspective, this multiple exchange rate system constitutes a direct, de facto reduction in the recoverable value of the deposit. This functions as an undeclared, incremental haircut executed through daily and monthly withdrawal restrictions. This massive difference is wiped off the bank’s books as a liability, magically transforming into settlement profits or a reduction in accumulated losses.
JNews Scoop: The “Commissions Cartel” Consumes Remaining Liquidity
Beyond foreign exchange delta profits, exclusive banking sources have disclosed to JNews Lebanon alarming figures regarding the exorbitant fees and commissions that banks have surrealistically imposed on clients and depositors for basic services, or even for simply managing frozen, inaccessible accounts.
Read also Exclusive- A Blow to the Opposition: The Gulf Alignment Shifts the Balance of Power in Lebanon
At a time when depositors remain barred from normal and free access to their money, our exclusive insights reveal that the lion’s share of banks’ current operating revenues is being extracted directly from the depositors’ own pockets. Today’s depositor is losing twice: first, via the masked haircut on the actual value of their deposit during withdrawals, and second, by being saddled with high banking costs and fresh cash commissions on frozen funds they cannot freely use.
This direct erosion of depositors’ rights—ranging from automatic monthly account maintenance fees to penalties on dormant accounts—effectively pads bank revenues at the expense of the limited liquidity available to citizens, all without a transparent legal framework for loss distribution or a clear priority line for repayment.
Persistent Solvency Gaps: Profits Devoid of Economic and Ethical Legitimacy
Here lies the core dilemma that JNews Lebanon places before the public and regulatory bodies: current banking profits cannot be treated as standard operating profits or an indicator of sustainable recovery. This holds true as long as the massive solvency gap remains unaddressed, and historical losses—including the financial deficit at the central bank—have not been formally recognized and distributed under fair, equitable rules.
| Current Banking Reality | Accurate Financial Classification |
|---|---|
| Growth in Superficial Profits | Redistribution of losses from the bank to the depositor |
| Multiple Withdrawal Rates (15,000 vs. 89,500) | Masked haircut and unilateral offloading of liabilities |
| Surging Commission Revenues | Direct depletion of the remaining liquidity of trapped depositors |
Achieving profitability within balance sheets heavily burdened by trapped deposits and uncollectible placements does not generate new economic value. Instead, it simply reveals that depositors are being used as a tool to recapitalize banks through the back door, beautifying financial statements to project a false illusion that the sector has bypassed the crisis.
A Firm Stance: The Depositor is a Creditor, Not a Shareholder
Economic and legislative principles are clear: depositors are not shareholders required to absorb capital losses or shoulder operational business risks; they are creditors on the balance sheets of these institutions.
Based on this foundation, any profits or returns generated by banks at this stage must, by law, be entirely ring-fenced within a transparent mechanism dedicated solely to a deposit recovery fund. They must not be used to cover inflated executive overhead or to polish artificial performance metrics.
Read also The Roundup- The “Framework Accord” in the Waiting Room.. Doha “Separate Rooms” Negotiations Deadlock
Before speaking of dividend distributions or boasting about a return to growth, the absolute and singular priority must be rebuilding depositors’ equity and maximizing recovery rates. By any economic or ethical measure, any banking profitability that does not pass through doing justice to the depositor is invalid and illegitimate. Real recovery for the banking sector will not begin until losses are acknowledged, balance sheets are comprehensively restructured, and human rights are placed at the very forefront of any government or banking rescue roadmap.
