The ongoing economic crisis has created a new adversary for the Lebanese people: banks. This is despite the fact that the banking sector has paid, and continues to pay, the price for misguided and corrupt policies over the years. Many employees in this sector have been laid off, and dozens of branches have shut down across various regions.
As the misfortunes of one sector can benefit another, money transfer companies have thrived in contrast. New companies have emerged, and existing ones have flourished, taking advantage of the halt in bank transfers and the poor economic situation to expand their range of services and open new branches, allowing Lebanese and foreigners to receive their remittances from home and abroad in hard currency in record time and without the costly travel and movement barriers due to rising fuel prices. They also provide services for paying official transaction fees, which has assured these institutions substantial profits and significantly increased their business and employee numbers.
So, have these companies actually filled the banking void? And what awaits the banking sector in the near future? Economic and financial expert Walid Abu Suleiman points out that after October 17, 2019, depositors began losing confidence in the banking sector after it became difficult for them to access their deposits, leading to complete confiscation in some cases. Bank transfers ceased, while cash transfers through travelers' bags and money transfer companies flourished, with the external remittances to Lebanon exceeding 6 billion dollars in 2021. A significant portion of this amount passed through these companies, which have also turned into money exchange institutions following the directives from the Central Bank.
However, Abu Suleiman highlights in an interview with MTV that these companies, despite their importance in the current situation, cannot replace banks, which are supposed to offer services like opening accounts, loans, and electronic financial transactions through credit cards. Currently, their operations are limited to cash withdrawals and opening credits for companies for imports.
But what is the fate of banks? When asked, Abu Suleiman replied, "The sector is in a very bad state, and we expect more bank branches to close. There is a need to restructure this sector because there can be no economy without banks." He believes that "the state is enforcing a law of the jungle in the absence of the rule of law, which has placed the citizen and the bank face to face in a very unfortunate phenomenon we hope does not last."
In the absence of banks, which have become hollow shells, citizens have turned to money transfer companies and "cash transfers" to survive during the successive economic storms. However, how can those whose money has been trapped inside the country survive, especially if no one is sending them money from abroad?
