Bankers' Association Launches Legal Attack on Banking Reform Law Approved by Finance Committee

The Lebanese Banks Association has launched a broad legal attack on the amendments approved by the Finance and Budget Committee to the law on banking reform and reorganization, arguing that several provisions undermine banks’ and shareholders’ rights, grant extensive and arbitrary powers to the Central Bank Council, and raise constitutional and judicial concerns.

In comments prepared by the association’s lawyer Eli Emile Chamaa, the association stated that applying international standards in bank restructuring cannot come at the expense of the Lebanese Constitution, demanding safeguards for the rights to defense, property, and equality, and calling for real judicial oversight over decisions made by the Central Bank Council.

The association objected to the bank evaluation mechanism, arguing that limiting objections to factual and technical errors—and banning challenges to the evaluation methodology—constitutes an undue restriction on the right to defense. It also found the ten-day objection period excessively short, urging its extension to twenty working days and allowing appeals before a specialized court.

The most prominent objection concerned shareholders’ rights. The association described the provision barring controlling shareholders from participating in capital increases as "extremely dangerous," warning that depriving them of preemptive subscription rights could amount to expropriation of a key element of property ownership and a violation of Article 15 of the Constitution.

The association characterized the clause regarding the Central Bank Council’s powers as "the most dangerous in the bill," noting that it allows measures not strictly defined by law under the pretext of removing obstacles to bank reform, thereby opening the door to arbitrariness. It also called for clear rules governing the recovery of funds paid to bank administrations or transferred abroad, rejecting any actions based solely on "suspicion" without recourse to the judiciary.

Additionally, the association rejected granting the liquidator powers it deemed judicial in nature, emphasizing that nullifying legal acts must remain within the jurisdiction of the courts. It demanded expanded appeal rights against decisions by the Central Bank Council, the liquidator, and the appraiser, and insisted on ensuring the court’s ability to halt enforcement of contested decisions.

On the issue of depositors, the association called for immediate implementation of the principle of equal treatment among depositors upon publication of the law, with the remainder of its provisions suspended until the financial regulation law is enacted and deposits are recovered.