Sources in the City of London said the Beirut-born Mr Safra, 67, knew there was a "contract on his life" and pointed to a possible "Russian connection". Mr Safra's American bank unmasked the embezzlement of international aid to Moscow last year.
The attack - a month before the completion of the pounds 7bn sale of Mr Safra's New York and Luxembourg banks to the British banking giant HSBC - sent a shudder through the super rich of Monaco, where violent crime is almost unknown.
All traffic into and out of the tiny state was halted as Monegasque and French police searched for the two hooded intruders who burst into the luxury two-storey flat close to the Monte Carlo casino in the early hours of yesterday.
The bodies of Mr Safra and a young woman, believed to be the nanny of his wife's granddaughter, were found in a bathroom where they had taken refuge. Mr Safra's bodyguard, who was stabbed by the raiders, was in a critical condition last night in the Princess Grace memorial hospital.
The two masked men, unable to break down the bathroom door, started a fire on the balcony of the apartment, which spread to the roof of the sea-front building and the flat itself. The billionaire and the young female employee were overcome by the fumes and then suffocated. Mr Safra's Brazilian wife, Lily, and her granddaughter, locked themselves into a different room and survived.
Judicial officials in Monaco began a murder inquiry yesterday afternoon but said the motive for the attack was unclear. It might have been a robbery gone wrong or it might have been murder. There was no immediate sign of anything having been stolen but the attackers appear to have been armed only with knives, which appears to rule out a professional, contract killing.
Mr Safra, a Lebanese Jew, had a reputation for scrupulous integrity. He had built his financial empire from scratch, after leaving Beirut when he was 16 years old. The Republic National Bank of New York - later the Republic New York Corporation - was founded by Mr Safra 33 years ago and the deal selling the bank to the international banking conglomerate HSBC was due to be finalised around 3 January. HSBC said yesterday that Mr Safra's death would not affect the deal but banking analysts and insiders predicted that there might be some delay.
It was Republic New York which blew the whistle last year on the alleged embezzlement and money-laundering of hundreds of millions of dollars of international aid to Russia through the Bank of New York.
Revenge for these revelations was being offered last night as one possible motive for Mr Safra's murder. Police declined to comment on these theories but Monaco has become a haven for scores of nouveaux riches Russians, including organised crime leaders.
Mr Safra, who was suffering from Parkinson's disease, had decided earlier this year to wind down his activities and sell his 29 per cent share of Republic New York and a sister bank in Luxembourg to HSBC Holdings. Sir John Bond, the group chairman of HSBC, said yesterday everyone at the bank was "appalled to learn of the sad news" of Mr Safra's death. He promised that HSBC would "uphold the banking tradition and integrity which were the hallmarks of Edmond's life".
The deal, agreed in outline in May, was held up when two employees of a subsidiary of Republic New York were accused, by a Japanese company and others, of helping a US financial guru to mount an elaborate fraud.
Legal claims in the "Princeton affair" are still outstanding but HSBC completed the Republic National deal last month after Mr Safra volunteered to take a $450m (pounds 280m) cut in his $3bn share of the sale.
Like scores of wealthy people, Mr Safra had chosen to make his principal home in Monaco, partly because of the tax advantages, partly because it is known to be the most secure two square kilometres in the world. Although the principality has been accused in recent years - by France, amongst others - of turning a blind eye to white-collar crime (especially money- laundering), the country has almost no violent crime. There is one police officer for every 60 inhabitants; over 100 security cameras monitor the streets day and night; an average of 200 random identity checks are carried out daily.
Whatever the motive, the murders will come as a severe jolt to the principality. How did two men, armed only withknives, penetrate the security of a building, which contains the offices of several banks - including Republic New York - as well as luxury apartments?
The alarm was given at 5.30am, when smoke was seen pouring from the roof of the Belle Epoque building in the Avenue d'Ostende, on the hill overlooking the port.
Police believe the intruders triggered a security alarm when they entered the apartment, giving Mr Safra and his family time to lock themselves into two different rooms. After stabbing the bodyguard in the chest, the attackers were unable to reach the other members of the household.
It is believed that they started a fire on a balcony, which rapidly spread to the domed roof of the building and then into the flat itself. By the time firefighters arrived, Mr Safra and the nanny had been overcome by fumes.
It took firemen three hours to bring the fire under control.
The minister of state of Monaco, Michel Leveque, who is an official appointed from the French foreign ministry, went to the scene, demonstrating the seriousness of the incident for the principality.
Mr Safra, who was once the head of American Express, was described by a business associate as a "discreet, even secretive man with impeccable manners. He always had a friendly word for everyone".
He was the son of Jacob Safra, the head of a wealthy Jewish banking family from Aleppo in Syria that moved to Beirut at the end of the First World War. At the age of 16 he left school and began working at his father's bank where he specialised in precious metals and international exchange.
The family fled Beirut after anti-Jewish riots following the establishment of Israel in 1948. The family originally went to Brazil - where his two brothers Moise and Joseph still own banks. Mr Safra went on to the US where he built a banking empire, based - unusually - on reinvesting the deposits of rich New Yorkers rather than granting loans. Founded in 1966,Republic New York now has 80 branches in the metropolis, the third largest network in the city and 17th largest in the US. His other main company, Safra Republic Holdings, based in Luxembourg, has subsidiaries all over the world.
Republic also lent money to developing nations like Argentina and Brazil in the Eighties. When those nations defaulted on international debts, Republic responded by writing off most of the loans and nearly erasing profits in 1987 and 1989. Republic also suffered badly in the early Nineties and again when Russian investments failed two years ago.
The murdered billionaire was financed the building ofsynagogues, schools and community centres around the world and recently helped underwrite a school in Paris, which he named for his father. Mr Safra also founded the Jacob Safra Institute of Sephardic Studies at New York University and funded a chair for Sephardic Studies at Harvard University.
He is survived by his wife and her children Adriana and Eduardo, as well as his brothers and three sisters, Arlette, Gaby and Huguette.
Mr Safra had been expected to play a continuing role in the absorption of Republic by HSBC. In a rare interview two years ago with the Swiss business magazine, Bilan, he said that he wanted his banking empire to survive for "10,000 years".Reuse content