AN INVESTIGATION BY CAPITAL ISSUES
For decades, Lebanon’s banking sector was a regional financial magnet, deeply intertwined with the fortunes of wealthy individuals and institutions across the Arab world. Arab nationals, from the Gulf to North Africa, played a pivotal role in driving foreign deposit inflows, shaping Lebanon’s monetary landscape, and fueling cycles of prosperity and, ultimately, crisis. Below is an investigative report presenting key data, historical context, and the latest available figures on Arab nationals’ deposits in the Lebanese banking system.Lebanon’s banking sector has long been entwined with Arab capital—in deposits, investments, and bank ownership. The sector’s capacity to attract regional funds, particularly from the Gulf and neighboring Syria, has historically been a significant stabilizer and driver for Lebanese finances. However, the scale and composition of Arab deposits and capital have changed amid Lebanon’s recent crises and broader regional trends.
Arab Deposits in Lebanese Banks – Main Types of Arab Deposits
- Private (Non-State) Deposits: The vast majority of Arab deposits in Lebanese banks, especially those from Syria and the Gulf, are private—belonging to individuals, families, and companies—rather than sovereign or state funds.
- Non-Resident Deposits: Arab depositors contribute to the large pool of non-resident accounts. While Lebanese expatriates comprise over half of non-resident depositors, Arabs (notably Syrians and some Gulf nationals) make up a significant portion of the remainder.
- Currency Profile: These deposits are overwhelmingly denominated in foreign currencies, mainly US dollars, reflecting both the preference of Arab savers and the “dollarization” of Lebanon’s post-war financial landscape. By 2017, nearly 70% of deposits were in foreign currency.
Volume and Proportion
- Estimates of total Syrian deposits in Lebanese banks vary widely, but credible financial estimates pin the value post-crisis at up to $8 billion—far less than public rhetoric.
- Historically, non-resident deposits (which include most Arab deposits) have averaged about 25% of total deposits. With Lebanese expatriates comprising the majority, Arab country nationals likely account for a single-digit percentage share of total Lebanese bank deposits post-2019.
Trends Up to 2025
- Since Lebanon’s 2019 financial crisis and subsequent banking restrictions, Arab deposit flows have stagnated or reversed, with capital flight back to safer jurisdictions and a collapse in trust.
Arab Capital: Ownership and Control
Arab-Owned Banks and Investments
- Bank of Beirut and the Arab Countries (BBAC): Notably founded by a consortium of Lebanese and Arab businessmen in 1956, the BBAC remains one of the top ten banks in the country. Its shareholders include major Lebanese families as well as links to regional partners.
- Branches of Arab Banks: Multiple Arab banks operate in Lebanon, such as Arab Bank (Jordanian), Banque Misr Liban (Egyptian), and Rafidain Bank (Iraqi), with Lebanese branches serving the Arab diaspora and corporate clients.
- GCC Investment: Gulf Cooperation Council (GCC) investors historically maintained minority stakes in Lebanese banks, especially in the 2000s. However, political instability and the economic meltdown have sharply curtailed new capital inflows from the GCC.
Market Share and Composition
- By 2025, the proportion of direct Arab capital in Lebanese banks is outweighed by (1) politically-connected Lebanese holdings and (2) holding companies, often in tax havens. Still, the visible share of Arab equity is relatively modest compared to the era prior to the 2019-2020 crisis.
Forms of Arab Capital
- Strategic Equity Holdings: Arab investors primarily hold minority interests or strategic partnerships rather than controlling stakes.
- Corporate Deposits: Companies from the Gulf and Syria have maintained operational accounts and deposits, though these have declined sharply since 2019 due to capital controls and a lack of trust.
- Interbank Lines: Some Lebanese banks maintain correspondent relationships and funding lines with Arab region institutions, a practice that has diminished amid the crisis.
By mid-2025, Arab deposits in the Lebanese banking system are mainly private, concentrated in non-resident accounts, and denominated in foreign currency. The share of Arab capital in direct bank equity is minor and, outside of a handful of banks with historical Arab links or branches, larger financial power remains in Lebanese or politically-connected hands. Lebanon’s financial turmoil has sharply reduced both new Arab deposits and investment appetite, signaling a pivotal shift from its historic role as a magnet for regional capital.
The latest data for 2023 indicates that total bank deposits in Lebanon were approximately $94.75 billion by the end of 2023, showing a significant decline from previous years due to the ongoing financial crisis and currency devaluation. Of this total, non-resident deposits—which largely include Arab nationals’ deposits—stood at about $21.14 billion by the end of 2023, down around 9.66% from the previous year.
Arab nationals, particularly from Gulf countries, have historically accounted for a significant share of these non-resident deposits. Given that non-resident deposits comprised roughly 20–22% of total deposits, the share attributable to Arab nationals in 2023 can be estimated in the range of $15–20 billion, consistent with prior analysis of deposit compositionprevious conversation.
• Total deposits (2023): ~$94.75 billion
• Non-resident deposits (largely Arab nationals): ~$21.14 billion
• Estimated Arab nationals’ deposits: ~$15–20 billion
Lebanon’s Banking System: A Regional Hub
• Pre-crisis importance: Lebanese banks offered high interest rates, strict banking secrecy laws, and a stable dollar peg, attracting deposits from wealthy Arabs in the Gulf, Levant, and North Africa.
• Diaspora link: Large segments of Lebanon’s own diaspora reside in Arab countries, with their remittances and investments bolstering Lebanese banks.
Data Timeline: Arab and Non-Resident Deposits
Notable Figures and Key Dates
2009–2012: Arab Flows Reign
• By 2009, 64.5% of electronic cash transfers to Lebanon originated from Arab countries, and of those, the Gulf Cooperation Council (GCC: Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman) accounted for 58%.
• United Arab Emirates: 24%
• Saudi Arabia: 13.5%
• Qatar: 9.3%
• Kuwait: 8.8%
• Iraq: 4.5%
• Jordan: 2.2%
• The remainder was split among other Arab and international senders.
2016–2017: Height of Confidence
• Non-resident deposits accounted for 20.3% of all bank deposits by the end of 2017. Resident deposits (Lebanese citizens and businesses) made up 77.2%, with the small balance from the public sector.
• Total deposits peaked at $173 billion by the end of 2017 (all sources, including private and public sectors).
• Most GCC depositors preferred dollar accounts, reflecting confidence in Lebanese dollar stability and the global connections of the Lebanese banking sector.
2019–2023: Crisis and Flight
• Pre-crisis (end of 2018): Deposits in the banking sector reached a record $175 billion. The dollarization of deposits also remained extremely high, exceeding 70%.
• Post-crisis (April 2023):
• Total bank deposits collapsed to $96.5 billion, after years of controls, devaluation, and capital flight.
• Non-resident deposits share fluctuated between 20–25% of total deposits. In June 2023, non-resident (many of whom are Arab nationals) private sector deposits made up 21.8% of the total.
• By early 2025, the total value of frozen funds in Lebanese banks (including both residents and non-residents) was estimated at $86–93 billion.
Estimates of Arab Nationals’ Holdings
• Direct Data Scarcity: The Lebanese central bank and most commercial banks do not publish detailed breakdowns of deposits by nationality. However, triangulation from remittance and non-resident deposit data—paired with external estimates—give a credible overview.
• GCC Influence:
• For much of the 2000s and 2010s, GCC nationals were estimated to hold the majority of non-resident deposits, though no public data lists precise values by country after 2012.
• Arab deposits often arrived as both personal and business funds, supporting the Lebanese banking cycle.
• 2023 Snapshot:
• If non-resident deposits represented roughly 20–22% of all deposits, and total bank deposits hovered near $100 billion, then Arab nationals’ deposits likely accounted for between $15–20 billion, depending on currency shifts and deposit withdrawals.
• Syrian nationals are a special case, with current private deposits estimated at $3–8 billion (estimates vary widely due to opacity and uncertainty). Higher figures cited in discourse are considered exaggerated.
Patterns, Motives, and Impact
• Flight and Withdrawal: Since Lebanon’s financial meltdown (2019–2021), Arab depositors, especially those from the Gulf, have reduced their exposure, with only a fraction of “fresh dollars” left accessible.
• Lost Wealth: Between 2019 and 2023, over $40 billion in deposits “evaporated” due to devaluation, distressed withdrawals, and conversions. Many Arab and Lebanese depositors remain locked out from their funds or face severe restrictions on withdrawal and transfer.
• GCC Political Friction: Political and diplomatic rifts between Lebanon and the Gulf have limited new Arab deposits since 2020, further reducing the sector’s regional insulation.
The implications of the Arab deposit share on Lebanon’s financial stability till 2025 are significant but nuanced, shaped by the broader context of Lebanon’s ongoing economic crisis and recovery efforts.
Broader Economic and Political Context
The effects of Arab deposit share must be viewed in light of Lebanon’s fragile political environment, ongoing reforms, and regional instability. Even with some deposit inflows stabilized in 2025, financial stability remains precarious and depends heavily on reform implementation and political stabilization
Arab Deposits as Part of Non-Resident Deposits Support Stability
Arab deposits constitute an important segment of non-resident deposits, which historically represented about 25% of total Lebanese bank deposits. While Lebanese expatriates are the larger group, Arab nationals – particularly from neighboring countries and the Gulf – have provided a notable share of foreign currency deposits. These deposits help maintain liquidity and foreign exchange buffers critical for financial stability.
Stagnation and Decline Post-Crisis Weaken Stability
Since Lebanon’s 2019 financial collapse, Arab deposit inflows have stagnated or reversed due to loss of confidence, capital flight, and banking restrictions. This decline has reduced the financial system’s ability to stabilize the Lebanese pound and support credit, contributing to ongoing economic fragility.
Dollarization and Currency Stability Dependence
Arab deposits, predominantly in foreign currency (mainly USD), play a key role in Beirut’s “dollarized” banking system. This foreign currency base underpins the Lebanese pound’s stability and banks’ capacity to meet foreign currency demands. Declining Arab deposits can exacerbate currency pressures and inflation if alternative foreign currency sources are not found.
Limited Scale of Arab Capital in Bank Ownership
Arab capital, mostly minority equity stakes or strategic partnerships, has a modest share in bank ownership. This means Arab investors have limited influence on bank governance and crisis management, limiting their ability to stabilize or inject capital into the system[Previous conversation].
Impact on Deposit Recovery and Reform Confidence
The reduction in Arab foreign deposits lowers the recoverable FX deposit base, complicating financial sector restructuring and deposit recovery plans. This can prolong the banking crisis and delay economic recovery if Arab depositors’ confidence does not rebound.
Why Deposit Data Is Opaque
• Secrecy Protections: Lebanon’s banking secrecy laws and political concerns have historically prevented transparent reporting on deposit origins by nationality.
• Regulatory Gaps: The central bank groups non-resident deposits (which include but don’t specify Arab nationals), making precise measurement impossible without internal banking disclosures.
• Arab nationals, notably from the Gulf, have historically made Lebanon a financial hub through bank deposits, with their holdings peaking pre-crisis at as much as a fifth of all Lebanese deposits.
• Deposit flight, currency crisis, and capital controls since 2019 have decimated both resident and non-resident (often Arab) account value and accessibility.
• Transparency remains lacking: while broad data indicate Arab deposits likely account for $15–20 billion as of 2023, no granular breakdown by country or individual nationality exists in public statistics.
• Sectoral stress continues, with Lebanon’s banking future unlikely to recover lost regional trust without deep reforms and settlement for trapped depositors.
