Lebanese bank workers let go as currency crash bites

Financial institutions across Lebanon are implementing silent cutbacks to their number of employees. This has become unavoidable since many of these banks are now being forced to close some of their branches in a bid to lower operational costs, as the collapse of the local currency, the Lebanese pound persists.

The decisions by different lenders come on the heels of a decision by the country’s central bank to further tighten the exchange rate used to withdraw cash in Lebanese pounds from US dollar accounts from domestic banks. This option became necessary in the absence of a more comprehensive line of action that could help boost the economy, which has been in a dire crisis since 2019.

Since autumn 2019, the apex lender has imposed currency restrictions, which currently mean that savers with dollar accounts have had no other choice but to make withdrawals in Lebanese pounds at an exchange rate of 3,900 pounds to the dollar.

However, the dollar is currently trading at a rate almost 400% higher than on the black market. The Lebanese pound has been pegged to the dollar since 1997.

While some banks are downsizing locally, others are opting to sell assets abroad. As of today, the estimated number of closed branches stands between 300 and 400 out of a total of 1,100 nationwide. Employees and contractors are at receiving end of these moves by lenders.

George Al-Hajj, president of the Federation of Syndicates of Bank Employees, stated that 2021 has been “very hard” for bank employees in Lebanon, adding: “Although no statistics have been conducted to show the exact number of laid-off employees, their number does not exceed 4,500.”

Yet several other bank employees are expected to be out of jobs soon. “We are in the middle of the storm, and the crisis will persist until Lebanon reaches an agreement with the International Monetary Fund on the restructuring process of the banking sector,” said Al-Hajj.

As of 2018, Lebanon’s banking sector had about 26,000, working for 61 banks. Since 2019, the sector has lost more than 17 percent of its workforce.