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Publishing Details
HARRIMAN HOUSE LTD
3A Penns Road
Petersfield
Hampshire
GU32 2EW
GREAT BRITAIN
Tel: +44 (0)1730 233870
Fax: +44 (0)1730 233880
Email: [email protected]
Website: www.harriman-house.com
Published in Great Britain in 2011 by Harriman House
Copyright © Jim Parton
The rights of Jim Parton to be identified as the author have been asserted in accordance with the Copyright, Design and Patents Act 1988.
ISBN: 978-0-85719-128-1
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher.
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher or by the Author.
About The Author
Born in Nairobi in 1959, Jim Parton was educated at Haileybury and St Andrews University, where he read French (but only for the two weeks before finals). After a short career in the City, he has become a freelance writer. For some years he ran the charity Families Need Fathers. His books include Unreasonable Behaviour, Let Me Entertain You (for Robbie Williams) and Walking on Air (for Trevor Jones). He is married, with four small children, the oldest of whom is four. He and his wife live in Silesian Poland where they are restoring a former bishop’s palace.
Chapter 1
I couldn’t see the point of suffering in the City of London if the sums I earned were only mildly revolting as opposed to completely obscene. It was make or break; either up or out. I’d been a stockbroker for five years and I really wasn’t rich enough. I was doing well at UBS Phillips and Drew, a respectable, if crumby, firm but not well enough.
It seemed to me that there was a window of opportunity that led into the financial stratosphere, but it would soon be closed. My clients were Japanese investment institutions which had just poured trillions of Yen into European stock markets, optimistic that the unification of Germany and 1992 would lead to a new economic miracle. I thought I would be able to trade myself up because a lot of broking firms saw these trillions as just the start of the arrival of a Wall of Money from Japan.
The Japanese had had loads of money to spare after twenty years of raking it in from the rise and rise in their stock and property markets. In early 1990, however, the Nikkei had collapsed, and it seemed to me that property would not be far behind. The domino effect would soon hit other asset markets strongly influenced by the Japanese. The evidence was there for all to see in the plummeting values of second-hand Van Goghs, Ferraris, golf course developments in Esher and condominiums in Hawaii. Second-hand Jim Partons would be next. I was a ‘sell’, and had to put myself on the market immediately.
A broker in my position, sensing that he could squeeze more money out of a situation, would normally stride into the boss’s office and threaten to leave if his pay were not upped immediately. The trouble is that in my case they would probably have said ‘Fine Jim, go’. I had an enemy in Tokyo; he was doing very nicely out there on a tax-free salary and saw me as a threat, because I could speak Japanese and he couldn’t. It would have made sense for us to swap jobs. He was senior to me and made sure it didn’t happen by sending hostile faxes to my boss every so often about my ineffectualness. He had a point; I was a lousy broker, but such details have rarely been known to hold back a career at Phillips and Drew, so I felt quite hard done by.
With the road to riches at P & D blocked, I was more than amenable to a discreet suggestion from an acquaintance at Merrill Lynch that I should consider an interview to work there.
I had been at Phillips and Drew for almost two years, a long time by recent City standards. It was an extraordinary firm. With a reputation for being bland even before the Union Bank of Switzerland had bought it, it was amorphous, inchoate, a vast blob of ectoplasm absorbing and suffocating all the young men and the handful of women in its path. The dealing room, equal largest in the City with the UBS bond floor downstairs, had all the excitement of Heathrow Terminal Four. We sat in six or seven forty-yard rows of salesmen, analysts and dealers. Stockbroking by the Henry Ford method: you could have any colour you wanted, provided that it was grey. Even the corporate Swatches I gave to my clients at Christmas were grey.
As a financial institution, P & D’s chief merit is that it is enormous. If you want to find out about almost any company in Europe, somebody there will be able to tell you. It is unlikely that the analyst will be full of analysis, but he will at least have a set of earnings forecasts and a competent understanding of the crucial financial ratios.
P & D pundits are often interviewed on telly, and quoted in the papers, a sure sign of mediocrity. When I was at Citicorp Scrimgeour Vickers, in its period of steepest decline, its analysts started to appear with great frequency in the market reports of the Financial Times. If Scrimgeour had actually been doing the business, it would have been the last place they would want to have appeared; the client would be furious at the indiscretion. I didn’t have to trawl through many copies of the FT to find this example: ‘British Steel edged ahead 11/2p to 681/2p after its broker, UBS Phillips and Drew, turned buyer of the shares.’ Sixty salesmen, on a day the market rose 26 points to 2,516, could only push a major house stock up 11/2p.
There was absolutely no way that P & D made UBS any money. With my computer system, flashing telephone board, floor space, company car and share of deal settlement, I must have cost them at least £250,000 a year to employ, of which salary was only £35,000. Multiply that by 300, add in the cost of all the hospitality suites upstairs, plus the salaries of half a dozen burghers of Zurich called Ruedi, and you got some pretty big numbers.
Take a look at commission income from a typical salesman such as me, and you got some pretty small numbers.
Logically, UBS should have closed P & D down, although it would have been an expensive process, entailing the loss of a large amount of face back in Zurich, not to mention London. But there may be entirely different reasons as to why it has been kept going. Who knows? Certainly not I.
There is a rule in Switzerland that deposits unclaimed after fifty years belong to the bank that holds them. About that length of time ago rather a lot of wealthy middle Europeans lost their lives unexpectedly. Many of them would have put their money in numbered Swiss bank accounts for safety. In the 1990s, many Swiss banks’ capital ratios improved substantially, at a time when economic fundamentals suggest they ought to be deteriorating. If such a Swiss bank had a subsidiary that loses lots of money, this process could be made to look a lot less embarrassing.
Swiss bureaucracy had taken hold at P & D and management was chaotic. I used to reckon that if I were to stop phoning clients altogether, it would be at least three months before anyone noticed. I put something close to this theory to the test; not on purpose, but because I felt unenthusiastic about my job, and unenthusiastic about what the analysts were telling me to tell my clients, whom I therefore didn’t call all that often.
There were frequent changes and the creation of new responsibilities. A new memo would arrive on my desk each day along the lines of: ‘Smith will spearhead the marketing