Bassam al-Sheikh Hussein, 42 holds a cigarette as he speaks with one of his hostages inside a bank, in Beirut, Aug. 11, 2022 (AP)

Bystanders praised an armed client who held bank employees hostage for hours Thursday in Lebanon because he couldn't access funds frozen as a hero.

The suspect, identified only as Bassam, was armed with a rifle and had doused the interior of the bank with gasoline, according to security sources.

But after eight hours the standoff ended peacefully.

"You are a hero, Bassam!" cheered bystanders outside the bank.

The incident was the latest to involve local banks and irate depositors who have been unable to access savings held in Lebanese banks since the country's economic crisis began in 2019.

The suspect turned himself in after the bank agreed to pay him $30,000 from his more than $200,000 in trapped savings, according to official media.

"Employees taken hostage have also begun to leave the bank," Lebanon's National News Agency (NNA) said.

Lebanese banks have imposed limited withdrawals of hard currency for most depositors, leaving more than 75% of the population struggling to make ends meet and afford even the most basic goods.

The man entered the Federal Bank of Lebanon's branch in the Western Hamra neighborhood just before noon on Thursday, bearing a firearm, a security source told Reuters.

The man demanded access to some $200,000 that he had in his bank account due to a relative being in the hospital and him needing the money. After the employee refused the request, he pulled out his gun.

The man’s brother who was on the scene told the Associated Press his brother was seeking to withdraw his money to pay for his father’s medical expenses and other family needs.

"My brother is not a scoundrel, he is a decent man," Atef al-Sheikh Hussein told the news agency. "He takes what he has from his own pocket to give to others."

A gunman broke into a bank in Beirut with a gallon of gasoline, threatening to set himself on fire if the security forces break into the bank, Al Mayadeen's correspondent reported.

A #Lebanese man has taken an unspecified number of people hostage, demanding the release of his deposits frozen by his bank in the wake of the economic crisis in #Lebanon. pic.twitter.com/34jJnWL7yZ
— Al Mayadeen English (@MayadeenEnglish) August 11, 2022

"Work is currently underway to provide part of the gunman's funds as means to negotiate with him," our correspondent added, noting that information suggests that he has five hostages.

At least one elderly man was released from the bank because of his age and government negotiators were deployed to begin talks with the hostage taker, the interior ministry said.

A Reuters witness could see a bearded man in a black shirt behind the gated entrance to the bank speaking to several men in plainclothes on the outside.

"Let them give me back my money!" he was heard telling them.

The situation caused a crowd to gather outside the bank, many of which were changing "down with the rule of banks!" a slogan that has been echoing throughout Lebanon for a while now, since the start of the economic crisis and the protests that followed suit.

Commercial banks cap monthly cash withdrawals in US dollars while only allowing limited amounts to be withdrawn in Lebanese pounds at a rate much lower than the parallel market rate, which leads to significant cuts in the original value of the deposits that have become incredibly inflated.

Banks claim to make exceptions for humanitarian cases, such as hospital care, but depositors say these exemptions are very rarely implemented.