Intra Bank’s collapse in October 1966 was the most serious banking crisis in modern Lebanese history, but it also became a turning point that reshaped the roles of the state and Banque du Liban in regulating the financial sector.
The crisis began when Youssef Beidas, who was outside Lebanon, refused to return to sign the bank’s balance sheet. Intra’s board also refused legal responsibility for its financial statements, prompting the Council of Ministers to withhold the requested liquidity even though it knew this would effectively cause the bank to suspend payments.
Intra closed its doors on October 15, 1966 amid widespread panic among depositors. It held roughly 15 percent of all bank deposits in Lebanon, placing the entire sector at risk of collapse.
Within days, President Charles Helou and the government adopted exceptional measures: banks were temporarily closed, immediate liquidity was injected and fifty million lira was secured for small depositors. Major amendments to the Code of Money and Credit created the Banking Control Commission, the Higher Banking Commission and the National Deposit Guarantee Institution, while granting monetary authorities the power to take control of troubled banks.
Lebanon had barely moved beyond the shock of Intra when the June 1967 war caused another banking panic. The government closed banks for four days and limited each depositor’s withdrawals to one thousand lira.
Elias Sarkis became governor of Banque du Liban in June 1967 and led the restructuring of the banking sector and the effort to save Intra from complete bankruptcy. That October, major creditors became shareholders in Intra Investment Company, capitalized at 280 million lira, while the company retained strategic assets including shares in Middle East Airlines and Casino du Liban.
By 1968, confidence was gradually returning. Consolidation reduced the number of banks from 88 to 72, deposits rose to 3.65 billion lira and the dollar remained stable at about 3.17 lira.
Under Sarkis, Banque du Liban made the strategic decision to increase its gold holdings. Between 1970 and 1971, the central bank accumulated more than 9.2 million ounces at the official price of $35 per ounce, only days before US President Richard Nixon suspended the dollar’s convertibility into gold—a decision followed by a sharp rise in the metal’s price.
Lebanon experienced one of its most prosperous periods between 1970 and 1974. Oil prices rose, Arab capital flowed into Beirut and the city became a regional financial and media center. Banks’ consolidated balance sheets grew by 226 percent in six years, while Lebanon recorded budget and balance-of-payments surpluses.
Warning signs nevertheless appeared beneath the prosperity. Banque du Liban observed an unusual rush into the Lebanese lira and a decline in the dollar’s price. It later emerged that armed groups and regional states had been accumulating large amounts of Lebanese currency ahead of the period that preceded the 1975 war.
In less than a decade, Lebanon moved from the brink of banking collapse after the Intra crisis to the height of financial and monetary prosperity. Many regarded it as the economy’s golden age, even though it already contained the seeds of the upheavals that would soon erupt.
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