The parliamentary subcommittee tasked with drafting the long-awaited banking reform bill made significant headway on Monday, as lawmakers inched closer to adopting several key provisions aimed at revamping the financial sector.
Chaired by MP Ibrahim Kanaan, the session was attended by Minister of Finance Yassine Jaber, a number of MPs and Central Bank Governor Karim Souaid. Discussions centered on the restructuring of the High Banking Authority, which will now be divided into two chambers: one handling disciplinary procedures, and the other overseeing the restructuring of failing banks.
The subcommittee also endorsed stringent independence requirements for members of the Authority. Under the proposed provisions, appointees must have no personal or financial ties to bank shareholders or management, no outstanding loans with the banks in question, no deposits exceeding $100,000 and no family connections up to the fourth degree with banking executives.
Kanaan emphasized that any future bank restructuring or liquidation must be based on a conclusive report from the Banking Control Commission, with the High Authority’s endorsement requiring a clear and justified rationale. He added that external audits, conducted under internationally recognized transparency and competency standards, would also be mandated.
The commission further defined the criteria for determining a bank’s failure or risk of failure, including breaches of legal obligations, liquidity shortfalls and failure to meet due commitments, which must be assessed within one week by the Control Commission.
The committee also reviewed potential bank resolution tools, such as recapitalization efforts by existing shareholders or new investors. However, debate on Article 14, which outlines the hierarchy of creditors, was postponed pending the government’s submission of the “financial deficit recovery” draft law. Lawmakers stressed this legislation is critical to safeguarding depositors and ensuring comprehensive reform.
Kanaan renewed calls on the government to urgently submit the “financial vulnerability” draft law, warning that without it, meaningful reform would remain out of reach. The committee unanimously condemned the executive branch’s failure to deliver the legislation, describing it as a breach of its reform commitments.
Meanwhile, Article 15, detailing conditions under which a bank may exit the “reform bank” status, was approved. The committee is scheduled to reconvene on Thursday at 11 AM to continue reviewing the bill.
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