Since Beirut's overextended Intra Bank collapsed a year ago, the precarious prosperity of little Lebanon has been flattened by multiple misfortune. Despite a massive infusion of loans from the Lebanese central bank, which halted subsequent runs on Beirut's 71 other locally owned banks, foreign confidence in Lebanese banking has faltered. Many billionaire sheiks, whose deposits had helped to make Beirut the banking capital of the Middle East, moved their riches elsewhere. Tourist trade, the other principal prop of Lebanon's economy, all but vanished with the Middle East war. Now, in once bustling Beirut, sumptuous hotels are almost empty, restaurants deserted, harbor-import traffic slow, nightclubs closed, stores shuttered for lack of customers.
Last week, with a lift from Wall Street, Intra Bank prepared to rise again. Under a deal worked out by the Manhattan investment-banking house of Kidder, Peabody & Co. and approved by the Lebanese government, the bank that was once the country's largest will be transformed into an international investment company. It will take over Intra's extensive business holdings—including thriving Middle East Airlines, Beirut's port and the Phoenicia Hotel, cement plants, warehouses, casinos, a French shipyard and valuable real estate on Paris' Champs Elysees—and try to recoup the bank's crippling losses with their future profits. As a $1,000,000-plus financial consultant, Kidder, Peabody hopes to raise $30 million to develop these and other Intra-owned properties like Baalbek Studios, which is building motion picture sound stages in low-cost Lebanon with the expectation of luring movie makers from Italy, where production costs have been steadily rising.
Gilt-Edged Load. Intra depositors with accounts of $77,500 or more will be paid off with stock in the new investment company; smaller depositors are to get half their money back in cash within three years, half of it as stock. The smallest (less than $3,100) Lebanese depositors have already been repaid in cash, through a total of $15.5 million in loans from the Lebanese cen tral bank.
The long-blocked road to Intra's resurrection finally opened after British auditors found that the bank, though short of cash, was so loaded with gilt-edged investments ($217 million worth) as to be a sound long-term venture. A new Cabinet under Lebanese Prime Minister Rashid Karami fired a committee that was irreconcilably split over whether to salvage or liquidate the bank, named another that dickered with Kid der, Peabody. The key to the rescue deal was winning the consent of Intra's major creditors, notably that of Kuwaiti Prime Minister Jaber al Ahmed as Sabah, whose countrymen had the largest stake ($40 million) in the bank. Kuwaitis will own some 35% of the stock to be issued by the new organization, the Lebanese government 25%, Qatar sheiks 7%, Lebanese depositors most of the balance. U.S. taxpayers also stand to gain from the rescue. The Agriculture Department's Commodity Credit Corporation, which had $22 million in Intra as an export loan to help dispose of surplus U.S. grain, will receive a 13% stock interest. The C.C.C. also gets first claim on Intra's U.S. assets, including its shuttered Manhattan branch (which will be liquidated), a 27-story Fifth Avenue skyscraper and revenues from the Warner Bros, spy film, Triple Cross.