Word: bank
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Dates: during 1960-1969
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...trouble began when Intra Bank, the country's largest, ran out of cash to meet a run of withdrawals and closed its doors-perhaps forever. Among Lebanese, shock spread as it might in the U.S. if a dozen giant banks and industries collapsed together. Intra held 38% of the deposits in Lebanese-owned banks. It owned nine other banks, four of them in Lebanon. It controlled 35 companies, including Beirut's largest hotel and thriving Middle East Airlines, the Beirut port, the cement industry, a gambling casino and a metalworks; in all, it employed 43,000 persons...
Belated Pledge. Ironically, Intra was far from insolvent, with more than $230 million in assets against $170 million in liabilities. But too much was tied up in risky long-term investments, depriving the bank of needed cash. Predictably, Intra's closing started a run that threatened to bankrupt other Beirut banks. At a twelve-hour emergency night session, the Lebanese Cabinet ordered a three-day bank holiday to stall for time. To avert another kind of panic, Beirut's stock exchange also closed. So did department stores and shops, bringing business in the city close to a standstill...
Authorities abroad closed Intra's branches in Paris, London and Frankfurt. New York's state banking superintendent seized control of the Manhattan branch to protect its depositors. When the three largest U.S. banks (Bank of America, Chase Manhattan and First National City) defied the superintendent's demand to turn over $2,529,000 of Intra deposits-on the ground that the defunct bank owed them more than that elsewhere-he sued for the money. Some bankers fear that this wrangle could lead to retaliation against U.S. banks abroad...
Lebanon encouraged the influx of nervous money with a Swiss-like bank-secrecy law, low taxes and tariffs, complete absence of monetary controls (a freedom found today only in Lebanon and Canada). Spreading his investments farther than his sources of deposit, Bedas moved heavily into European real estate, began issuing traveler's checks, last year even joined New York's McDonnell & Co. in starting a mutual fund sold in the Middle East, Germany, Switzerland and Latin America. Despite the increasing complexity of Intra's operations, Bedas ran it as a one-man show, scoffed at bankers...
...Abdel Nasser and Saudi Arabia's King Feisal, leader of the Middle East's conservatives. When Nasser-financed newspapers in Lebanon attacked Feisal, Saudi and Kuwaiti sheiks yanked $30 million out of Intra in one month. On top of that, Lebanon's three-year-old central bank fumbled its chance to prevent the crisis. Asked to help Intra, the bank stalled, then offered only feeble sums in aid, finally failed to advance promised cash on time. Worst of all, as the debacle neared, word of it leaked out from the staff...