The banks that are currently in trouble in Lebanon closed their doors Tuesday to customers to protest a recent court decision that required one of the country’s largest banks to pay two depositors their cash-trapped savings.

The Association of Banks in Lebanon (which lobby for banks) released a statement calling it an “open-ended striking” and criticizing the court ruling. They claimed that the decision was harmful to all depositors because banks can’t afford to pay everyone else their savings in full.

The bank’s demise is part of Lebanon’s unprecedented financial crisis and economic meltdown that began in 2019. This was after years of corruption and poor management by the country’s leaders. The Lebanese dollar has lost 97% of its value relative to the dollar, and over three quarters of Lebanon’s 6 million population have been forced into poverty.

The banks implemented informal capital controls to limit cash withdrawals in an attempt to avoid bank failure during the crisis. People with accounts in dollars cannot withdraw small amounts in Lebanese dollars. This is because the black market, or the rate used to buy and sell most goods, has a much lower exchange rate than the Lebanese pound.

Some overseas depositors were left without their savings and launched lawsuits to force banks to release their money. Others chose to enter banks and take their money. This led to banks going on strike in September 2022.

The verdict in a 2022 case against Fransabank was overturned by Lebanon’s Court of Cassation last week. Two depositors had sued Fransabank for their money in cash. The previous verdict was overturned, which allowed the bank pay them with a cheque.

However, cashing the check would allow depositors to recover their funds at a substantial loss.

It was the first such legal decision since the crisis.

Tuesday’s statement by the banks’ association stated that the crisis was not one bank’s or all banks’, but one that “affects the whole financial and banking system”, which includes Lebanon’s central bank.

It urged the government to implement the reforms the International Monetary Fund made a condition of an economic recovery program. These included a capital controls law, lifting bank secrecy and restructuring the country’s banks.

Since May 2020, talks between the government of Lebanon and the IMF began, the IMF has criticised Lebanon’s slow progress in reforms.

Despite this, banks are refusing to accept responsibility from their shareholders for the crisis and insist that the government and their depositors bear the greatest burden.