First bank in Lebanon and considered as an important bank in the world because of its participations during its crash in 1966, the Intra Bank was founded only in 1951 by Youssef Beidas, of Palestinian origin by his father and Lebanese by his mother and naturalized Lebanese.
Even before the foundation of the Intra Bank, Youssef Beidas, understanding the usefulness of money transfers, will establish an exchange office, International Traders, using the name of Intra telex. Among the customers of this establishment, several wealthy men who will be among the shareholders of the Bank including its 3 main partners, Mounir Abou Fadel, vice president of the Lebanese Parliament, Emile Mousallam and Mounir Haddad.
Banque Intra, a success linked to banking secrecy and oil money
This establishment will first benefit from the establishment of banking secrecy in Lebanon, but also from the oil windfall following the exploitation of hydrocarbon resources from Arab countries and will allow financial transfers with the Lebanese diaspora or coups d’etat. and political instability that many countries were going through.
Thus, the Bank will quickly open subsidiaries abroad, such as in Europe and France more particularly, in various countries of the Middle East or even North or South America.
It will have, during its bankruptcy, up to 17% of the total deposits in Lebanon (there were at the time many foreign financial institutions operating via subsidiaries in the Land of Cedars), 38% of the deposits of Lebanese banks and 60% local banking activities were carried out by this establishment.
It will be remembered, for example, that the Intra Bank owned the CIOTAT shipyard in France, and significant shares in many other companies, including the Casino du Liban which was only inaugurated in 1959, the Middle East Airlines (MEA) or the Port of Beirut.
Among his other properties, a 27-storey skyscraper on 5th Avenue in New York, or even land located near the Champs Elysées which will be sold in the 1980s.
Participating in the Lebanese economy, Youssef Beidas will also set up the Studio Baalbeck company, still in the 1950s.
However, this success will start by worrying the Lebanese and foreign authorities.
On October 14, 1966, the Intra Bank will suffer from a lack of liquidity which will lead it to stop honoring its payments.
In question, the refusal of the Lebanese Central Bank founded in 1964, to grant these liquidities.
Many will accuse the Lebanese political authorities of being behind this refusal because of their concern about the growing influence of a man of Palestinian origin on the local economy and in particular its infrastructure, via the MEA or the Port of Beirut.
Youssef Beidas notably financed, according to certain rumours, an important part of the PLO which then placed itself as the military wing of the Palestinian resistance to the Israeli occupation. These concerns had already been expressed by President Fouad Chehab.
The Lebanese authorities were not the only ones to be concerned about this influence. Saudi Arabia also had expressed its fears because of the secular and nationalist nature of the causes that the businessman supported. Its establishment also served as a refuge for the funds of opponents of the regimes of Arab countries, whether they were Syrian or Egyptian opponents, or nationals of countries of the Arabian Peninsula.
However, it was under his successor Charles Hélou that Banque Intra’s difficulties began after Banque du Liban refused to approve a loan for the institution for an amount of 30 million dollars.
The Lebanese authorities will file with Interpol an international arrest warrant against the businessman while the latter was trying to obtain loans to bail out his bank.
He was then in Brazil with his wife and 3 children.
Sentenced in his absence to 7 years of forced labor for fraudulent bankruptcy, Youssef Beidas will however be placed by the Brazilian authorities under surveillance at home. He allegedly pretended to have a heart attack.
However, it was 2 years later, in 1968, that Youssef Beidas died of pancreatic cancer in Switzerland. Some will regard his death as suspicious.
Seismic financial consequences of the bankruptcy of Intra on Lebanon and the Middle East
The consequences of the Intra Bank bankruptcy will be seismic throughout the Middle East and will affect Lebanon in particular, which will see its banking system, hitherto considered reliable, be discredited.
In lack of liquidity, the establishment was however rich in real estate. However, it had to face significant losses against the backdrop of speculation on precious materials or on the dollar.
Thus, on the eve of his bankruptcy, Youssef Beidas would have lost nearly 70 million dollars, by betting against the American dollar while the American authorities had taken measures to control inflation.
Moreover, also on October 9, 1966, Saudi Arabia had decided to withdraw the funds it had placed there.
He had also indicated to the supervisory authorities that he would guarantee these losses through his private funds.
In addition to a political vendetta, many irregularities revealed during the investigation
The investigation which will begin reveals other irregularities among which important loans granted to the administrators of the bank or the payment of dividends of subsidiaries however loss-making. The bank’s funds would also have been used to guarantee personal loans granted to Youssef Beidas, with foreign establishments.
Also at the origin of the lack of liquidity was the fact that only 5% of deposits were in liquid form against a regulation obliging 25% of deposits to be in liquid form at the time. This provided an advantage to the bank, which thus had more money to invest, but with the disadvantage of being exposed to a liquidity crisis.
The Intra Bank crash will be the source of many conspiracy theories. Thus some will accuse the establishment of having laundered money linked to the Corsican mafia on the basis of information provided by the FBI, or even drug trafficking of the famous “French connection”.
However, due to its holdings, the bank will still remain essential for the Lebanese economy. A rescue plan will be quickly put in place. It will consist of the dismemberment of the bank into several entities grouped together within the Intra Investment group which will be the recipient of the main holdings of the defunct bank.
Currently, the Banque du Liban holds 28% of the shares of this new company, followed by the Kuwaiti government which holds 19%, the Lebanese government holding 10%, the central bank of Kuwait (4%) and the government of Qatar (3%).
There is currently talk for the Lebanese government to sell its shares as well as those of the BDL to reduce its public deficit. There is also talk of privatizing the MEA companies or the Casino du Liban company, which are now directly owned by BDL following a restructuring of Intra’s assets.