BANKING ON TOM CHAPTER 11

 BANKING ON TOM CHAPTER 11

THURSDAY

 

Morning had not broken all sweetness and light in the Osborne household. Diana had arrived the day before unannounced. She despatched Michelle the au pair on the spot. Michelle had proved too pretty and too French. She had paid Michelle two months’ salary and bought her a one-way ticket to Paris. She sent instructions for the agency to find an ugly au pair to start in two weeks’ time when the girls returned from holidays. Diana was spoiling for a fight but Ben didn’t have the time or the interest. This infuriated Diana even further. She hurled a tea cup in his direction as he closed the door behind him. The cup caught closing door and smashed into pieces. Ben smiled. With Michelle hors de combat Diana would have to tidy up the house herself. He reflected that Diana was perhaps taking their marriage more seriously, This surely had to be a good thing. He wondered.

 

He took the tube into work even though he had use of a gleaming top of the range Mercedes sedan and more importantly a coveted car space at Head Office. After twenty years fighting with London traffic he had yielded to the inevitable and now used public transport. Besides it gave time to think. He needed to think of how he might deal with Maura. He would not make it too easy. He would play it hard to get, letting her know how difficult it would be to achieve sign off. She would owe him and she would have to know that. While he got a nod from his board, he still needed formal approval. And Boards could be difficult creatures to predict and control. He had seen so-called 'certainties' in the Boardroom go down in flames over the years because of a stumbling presentation. Boards were above all collective animals. No one wanted to be out of step or to be seen out of step.

 

Nevertheless he felt fairly confident that the executive directors would come round to his position.  Bonuses would be calculated in the next four weeks and paid out after year end in March. After a period of repentance following black Monday in October 1987 when the stock market fell over 20%, animal instincts had returned. People in the know were back betting heavily on oil shares. People were making and losing fortunes. Some of the non-executive directors were facing margin calls. Many were ‘names’ at Lloyds insurance. They ‘lent’ their name by underwriting Lloyds insurance risks and reaped dividends every year from the insurance market. Most of the time. Occasionally the insurance market would turn and the names would be called on to write personal cheques. Money flowed the other way. Theoretically there was no limit to the amount of the call. Occasionally this resulted in bankruptcies. Very rarely but very painfully. One wag suggested they should transfer all their money into their spouses name, if they could trust their spouses.

 

He would employ Robert Lyons to blind them with science and show them how the extensive underwriting by others would protect them from the risks. There were risks but the rewards were even greater. Besides - the US Banks would soon learn from this trade and muscle the British Banks out of the way. They had this one opportunity. Ben and Robert skilfully worded the Board approval so that in theory they could double their trading by repeating trades once the first trades had been executed and put to bed. The possible rewards could be double what directors had imagined. It wasn’t their duty to do the Directors’ thinking for them. As long it went well no one would ever complain and the Directors would claim they had full knowledge all along.

 

But the process began with Maura. He had to show her he was doing her a huge personal and professional favour. This favour could be banked for use in the future.

 

Back in Ballsbridge Dominic Fallon was in deep discussion with his old friend, Jim O’Sullivan. Dominic had been the Managing Director for the past decade of the low-profile Banco di Como Ireland. Como was a small city in Italy with a population of less than 100,000. Nevertheless it boasted over forty Banks and Savings institutions. Como had become a magnet for wealthy foreigners. It also had a long and impressive history in trade finance. Banco di Como in Ireland saw increasing opportunities in Ireland which was opening up after joining the Common Market. Ireland exported much of its agricultural produce and there were well managed agribusiness companies that required letters of credit and other facilities. The Irish subsidiary had very deep pockets but had struggled to achieve market share. They had good relationships with local banks in particular IBB who did not view Banco di Como as a threat. Dominic and Jim had studied commerce together in UCD in the mid-sixties and had kept in touch. They met once a year to see who could play worse golf. Instead of getting better both seemed to be retrogressing. But it didn’t seem to matter. Both were high handicappers and felt sorry for the golfers struggling in the mid-teens and getting annoyed with themselves on the golf course.

 

Jim laid out his cards. BBB wanted out and quickly. He could supply all the figures that Dominic needed. IBB was not a difficult bank to understand. It took in deposits and lent money and did a small amount of foreign exchange trading. The loan book was the jewel in the crown. Over a twenty-year period Tom Nolan had built up not the biggest but one of the most profitable and prestigious loan books in Dublin. All of Irelands captains of industry were clients either personally or through their companies. Tom chose to sidestep the get rich quick clients. He had avoided the exotic tax deals brought in by tax firms. Often the big firms were the worst offenders. Jim could produce all the figures Dominic would need. But he needed an answer asap. He explained how his chairman Sebastian Shackleton was tapping private equity. With Sebastian’s extensive contact list and impeccable record he could well be successful. Jim assured Dominic that he had an exclusive in that no other Bank would be approached. His only competition was non-bank.

 

Dominic was a man of action. He bade Jim to stay in the room while he called Head Office in Como. Dominic’s immediate boss was Frank Miller, an Italian American. Frank  had lived much of his life in Como but had cut his banking teeth in Wall street two decades previously He mastered both English and Italian flawlessly. The first five minutes of the call was made of pleasantries. Frank had a palatial office overlooking Lago di Como, the Lake of Como. He reminded Dominic that he was invited to come over and spend a few days in Head Office. Nothing too draining and to bring his wonderful wife with him. There were lots of fashionable boutiques and restaurants in Como.

 

Dominic explained that he had Jim in the room and gave Frank the salient points. Frank was familiar with IBB. In fact they had ‘run the ruler’ over IBB in the past. They could have bought the Bank for half the price only five years ago but Frank’s Board were not fast or hungry enough. Now times had changed. The Board of Banco di Como had come to reluctantly accept they needed to expand or die.  This time the price tag on IBB would be between forty and fifty million pounds. The money was not a problem for Banco di Como. They had very deep pockets. They would have to move at a tempo they were not used to. This was the opportunity of a decade. Miss this opportunity and another might not present itself for a long time, if ever. It was all very well having splendid offices on the banks of the lake, but the view would not pay the rent. 

 

The men went through the headline figures. Frank said the deal could be attractive if the figures could be substantiated. IBB was known both in Dublin and Como so there should not be too many surprises if any. Bankers don’t like surprises. Few people do.

 

 

Ben didn’t make it too easy for Maura. He didn’t make it too hard either. Just enough to persuade her of the great lengths he was going to ‘just for her’. They went through the list of approvals methodically. Some banks were discarded as counter parties, some were added. Maura was impressed. But then Ben had been around the block a few times and then some. By some ‘miracle’ they completed their work in time to head off to Ben’s favourite restaurant. Not an expensive upmarket dinery as some might have expected but a discreet family-owned restaurant a mere ten minutes’ walk from the office. The café was populated by upper civil servants and literary figures. In short people who knew their food and wine. The family imported many of the raw products from their native Sicily, especially the virgin olive oil and the wonderful red wine from Avola, south of Catania. After a gin and tonic to start and a glass of Nero d'Avola, Maura began sharing her marital problems with Ben who was interested up to a point. He wondered if she had ever travelled to Port Grimaud in the Côte d’Azur where he owned a charming apartment with its own mooring. She was only familiar with the Rue de Bac in Paris where she had spent a summer as an au pair. He reflected his own au pair had disappeared back to Paris in short order. Maura was a big fan of France. Of Paris anyway. Of its food and wine. Not that there was anything wrong with this fine Italian wine.  Ben smiled and took note. He ordered a taxi for her as the company car was otherwise occupied. Overall he was happy with a day that had started less than optimistically.

 

Back in Dublin Dominic Fallon CEO of Banco di Como Ireland was sitting down with Jim O’Sullivan for their second meeting. Jim came armed with management accounts. There were no other staff invited at this stage. If the effort failed both could deny the event and neither would lose face. Jim explained again the background. BBB was a Bank in a hurry. They watched with jealousy the American Banks take ever greater share of the London market. The bonuses being paid to staff were enormous. BBB was losing some of its best staff.  BBB reckoned it had no more than a year to turn the ship. IBB was not the solution they needed, Steady consistent profits rising 10 percent a year were not enough. A sale or liquidation would retire the capital back to London where it could be better used, perhaps. Jim explained that they had planned a major trading deal for Friday 28^th. This would be a once off. It was not repeatable as all the other banks would have cottoned on. Beside it is not the style of banking they wanted. It might buy them a few weeks' peace while they arranged a friendly sale or takeover. Jim further reminded Dominic that he had competition in the form of their chairman Sebastian Shackleton who was hoping to raise capital from non-bank sources. He was not wasting Dominic's time, or create a bidding war. No other Bank was being approached.  

The discussion moved to price. Jim suggested forty million, perhaps as much as fifty.  Dominic wondered if thirty million pounds would seal the deal. Jim thought not. The net value of the Bank on the books was thirty million pounds and BBB would look for a margin over this to reflect the good will and the fact that even in a liquidation they could clear thirty-five million. Jim understood the matter was for Banco di Como, but he would be surprised if BBB would accept a figure under forty million and besides any offer from Sebastian was likely to be closer to fifty million.

 

Dominic asked Jim what his plans might be. Jim explained he had planned to retire in five years time - at sixty in any event, but this could be brought forward if needed. Dominic imagined a joint top role for both men, with Dominic taking over when Jim retired. But a lot of bridges needed to be crossed in the meantime. Both men liked and rated each other which would make the merger/takeover easier. Jim accepted it would be de facto a takeover, but it could be fashioned as a merger to assuage the concerns of staff and clients alike.

 

Jim said he would have a decision in principle the following day. He would have to travel to Como the following Monday and Jim might have to accompany him. They shook hands and Jim returned to his day job in IBB.