Lebanese banks, including the major Blom Bank, are now imposing commission fees on transactions made outside the country, making goods and services more expensive for Lebanese at home and abroad. Some Blom Bank customers received alerts on their phones on Wednesday.
The move affects Lebanese in and out of the country. For those outside the country using Lebanese bank cards, groceries, cab rides, and a cup of coffee are now more expensive.
For those in the country, Netflix subscriptions, Uber rides, and flights on any airline besides the national carrier Middle East Airlines, which has also implemented its own payment restrictions, are now more expensive.
One customer of Blom Bank, one of Lebanon’s biggest banks, received a message saying a 5 percent commission fee on purchases made outside Lebanon would be implemented April 1.
Preferring to remain unnamed, the customer told Arabian Business that the account already had a $50 cap on international spending, $25 of which can be paid through an international card.
“So the 5 percent commission is insane,” they said.
Other Lebanese banks have also introduced commission fees, and while it is not uncommon to pay a foreign transaction fee on some credit cards, the move comes at an especially troubling time for Lebanon
“Starting April 1st, Blom Bank started implementing a commission on international spending for clients who use their USD cards abroad. These fees took place only to cover the costs that are incurred by the bank upon facilitating several services related to the cards usage by our cardholders outside Lebanon (i.e. international spending, loyalty points) that are settled internationally,” the bank said in a statement to Arabian Business.
Other customers of the same bank shared screenshots on Twitter saying they were now subject to a 3 percent commission.
“It is worth mentioning that Blom Bank offers all fresh cards for free and cardholders are benefiting from receiving fresh money from abroad and using the card locally and internationally, that’s why the variable commission is applied for the segment of cardholders that are interested in using the card outside Lebanon. Noting that the above commission is not applied on the local transactions, cardholders can still benefit from using their cards locally for POS purchases, ATM withdrawals & online payments on local websites without any fee,” the bank’s statement continued.
Blom Bank has subsidiaries in 12 countries, including France, Saudi Arabia, and Qatar. Blom Bank France also operates in Dubai, and there is a representative office in Abu Dhabi.
Of Lebanon’s extensive bank network, Blom Bank has the widest foreign presence. In 2019, 3.5 percent of total assets in the bank came from the Gulf, 11.4 percent from the wider MENA region, 4.8 percent from Europe, and 80.3 percent were from within Lebanon. For total customers’ deposits, 3 percent came from the Gulf in 2019. In H1 2020, the bank’s net profits totalled $38.82 million compared to $238.78 million in the same period in 2019.
In March 2020, Lebanon defaulted on a $1.2 billion Eurobond, the first default on its $90 billion debt pile.
For over a year, Lebanese have been subjected to a string of informal, and illegal, capital controls designed to keep money in the country. Lebanese abroad have reported arbitrary external spending limits set on their accounts, some as low as $20 a month.
Lebanese have been subjected to a string of informal, and illegal, capital controls designed to keep money in the country
The country’s currency has plummeted, beginning alongside national protests that broke out in October 2019, and the pegged value of the local currency has slipped. Where LBP1,507 used to be equivalent to $1, now, on the parallel market, $1 is now equal to upwards of LBP10,000.
In March, the caretaker finance minister said food subsidies would be scaled back and gasoline prices would rise gradually to save the country’s fast dwindling foreign reserves.
The central bank has $16 billion left in foreign reserves, of which only $1 billion to $1.5 billion can be used to fund subsidies, enough for two to three months, caretaker minister Ghazi Wazni said in an interview, Bloomberg reported. Reserves have halved from about $30 billion a year ago.
The country’s deterioration shows no signs of letting up as government formation has stalled. The previous government resigned in the aftermath of the Aug. 4 Beirut Port explosion that left nearly 300 dead, left hundreds of thousands without homes and destroyed swaths of the capital.
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