Lebanon's Fransabank shuts all branches

The order required Fransabank to reopen the account of Egyptian depositor Ayad Ibrahim and pay out his deposit in cash or else its assets would be seized, his lawyer Rami Ollaik said.

Fransabank said it was implementing the order, with safes at its branches sealed with red wax. 

It said Ibrahim had closed his account and "recovered all of his deposit".

The bank did not immediately respond to emailed questions from Reuters seeking comment on Ibrahim's claim and whether the it would appeal against the judicial ruling.

More than $US100 billion ($A138 billion) remains stuck in a banking system paralysed since 2019, when the Lebanese economy collapsed due to decades of unsustainable state spending, corruption and waste.

Banks have called on the government to pass a capital control law but in the absence of formal controls, they have largely blocked US dollar withdrawals and transfers abroad, sparking numerous legal challenges, with mixed results.

The judge who issued the order could not be reached for comment by Reuters on Wednesday.

A Fransabank source said Ibrahim was no longer a client because the bank had issued him a cheque for the value of his deposit and he had signed for the cheque at a notary.

A spokesperson for United For Lebanon, an anti-corruption group representing Ibrahim, said he had "signed for the cheque but with reservation".

Lebanon's banking association criticised what it described as "arbitrary and illegal measures" being taken against lenders, saying these threatened to "topple the banking sector".

Ibrahim told Reuters he had deposited the money four months before the crisis began, adding that Fransabank had refused his request to transfer funds for his sick brother.

His lawyer said the deposit was less than $US100,000.

Banks have already closed many US dollar accounts by issuing cheques which cannot be cashed and instead change hands in the market at a fraction of their face value.

Another judge recently froze the assets of five other Lebanese banks and members of their boards while she investigates transactions they undertook with the central bank, a judicial document showed.

That judge has not charged any of the parties mentioned.

And last month a London court ordered Lebanon's Bank Audi and its peer SGBL to transfer $US4 million to a British client whose money was stuck in the banks.

An association representing depositors said Bank Audi subsequently closed more than 30 accounts belonging to UK citizens or close relatives, issuing cheques for the balance.