Shadow Banking
Page 1
Shadow Banking
Table of Contents
Title Page
Prologue
- BOOK ONE -
1 Revolving Doors
2 Roll Out the Barrell
3 Training to Trade
4 Buckingham Palace and Back
5 Waiting for the Numbers
6 Risk Meetings
7 Long and Wrong
- BOOK TWO -
8 In Vega Veritas
9 Comp
10 Trading Up
11 Hitting the Bid
12 Paying the Offer
- BOOK THREE -
13 The Player
14 The High Roller
15 The Master
16 The Drive-by
17 The Asian Option
- BOOK FOUR -
18 The New World
19 Blackening Skies
20 In the Eye
21 The Lee
- BOOK FIVE -
22 Departure
23 Zug
24 Long Haul
25 The Elephant Trade
26 Another Seduction
- BOOK SIX -
27 Negative Carry
28 The Price of Money
29 The Hedge
30 The Final Trade
31 The Reckoning
Copyright
Shadow Banking
C.M. Albright
Prologue
On the Beach
'I can almost forgive you for all the other things. I always knew you’d had a conscience bypass. But that? That was beyond anything.'
'It’s all relative.'
'It was a billion dollars.'
'It’s just a number.'
'For a long time, I might have agreed with you. But not any more. A billion dollars means something. Maybe not to you but it means something.'
'OK, maybe I was being trite.'
'And why me? Why did you do that to me? After everything else.'
'You were the only one I could count on to help me. What happened, happened for a reason.'
'The reason being your greed?'
'If I was being greedy, I was being greedy for life, not money. I was trying to stay alive.'
'Why didn’t you tell me that at the time?'
'I did. Don’t you remember?'
'I didn’t think you meant it. I thought you were exaggerating.'
'Well now you know that I wasn’t.'
'So, where’s the money?'
'It’s safe. For the moment.'
'Great. That makes me feel so much better.'
'Don’t be sarcastic. It doesn’t suit you.'
'I’m only sarcastic with you. I think I can be forgiven for that all things considered. So, come on, tell me, what are you doing here?'
'I needed to see you – for the last time.'
While they were talking, a third man, tall, wearing sunglasses and dressed all in black, made his way through the dunes. Once on the beach, he kept his gaze trained on the two men as he walked towards them across the sand.
- BOOK ONE -
1 Revolving Doors
FTSE 100: 2984
He loved that sound she made when they had sex. It was a rhythmic little gasp punctuated every now and again with an 'Oh that’s so nice,' or an 'Oh Al.' Once it had been an 'Oh Steve,' which had led to a tense situation – but he had forgiven her – Steve had been her former boyfriend. It was an easy mistake to make. It happens. It wasn’t as though he hadn’t closed his eyes on occasions and pretended Sam was any one of a number of other girls, including his forty year old former tutor at university. But there it was again, that sound, happy, lost, preoccupied with the moment, and Al realised that it was probably the last time that he would ever hear it. It made him sad and accentuated the magnitude of the decision he had made. He had been with Sam for two years at Durham University and they had lived together for a year of that in a flat with four other friends and a leaky roof. They were good times – probably the happiest of his life – but now they were about to come to an end. Sam was going to Thailand and from there to Indonesia and Australia where she planned to work for a while. A two year trip in all. There was no way a relationship could survive that amount of time spent apart. Not at their age. They were both twenty-two years old.
And as for Al, well, was he selling his soul? He was certainly following a very different path, going to work in the City. For a while at least. Until he decided whether he liked it or not, or whether he might want his soul back. The lure of a couple of years’ backpacking around Asia and Australia had been powerful, particularly with the thought of spending plenty more moments like this with Sam. But the fact of the matter was that he didn’t have any money. That was part of the impetus of wanting to earn some, or at least start out on a career, the primary goal of which was to earn some. He was fed up of living like a student.
In about ten minutes the two of them would have to get up, shower, dress and go their separate ways, Sam to Heathrow and a flight to Bangkok, and Al to the City of London and his first day at the venerable banking institution of Trenchart Colville.
In the meantime, he wanted to keep on listening to those little gasping noises she made, sounding more sweet than ever, as though forming a delicious little coda to the happiness they had shared. But the only way to keep the music playing was to get busy. Looking up at her as she straddled him, he smiled and gestured with his head, a little signal they both understood, and they moved together, a perfectly executed barrel roll, the practised fluency and precision of which was as reassuring as ever. They smiled at each other once again in acknowledgement of this and kissed before they pressed on, enjoying each other, as Al listened to those little gasps and their acceleration in frequency as the soon-to-be exes sprinted for the finish, to lie silent and breathless under a thin glaze of sweat with the knowledge that it was the last time that they would be naked in each other’s arms.
'I love you,' he said. And he meant it.
'I love you,' she said. And she meant it too.
They kissed again.
It was awkward walking to Fulham Broadway tube. They held hands. Al carried Sam’s rucksack. He was never very good at goodbyes. Sam cried a little; he wiped away her tears and they kissed outside the entrance to the station.
'Give me a call when you get to Bangkok,' he told her. She nodded and smiled, wiping away a tear as she swung the rucksack onto her shoulder and made her way into the station. They had agreed that they wouldn’t say goodbye but it did little to alleviate the poignancy of the situation. Sam looked back at him and there were tears on her cheeks and as he turned around, he realised there were tears on his as well.
But now he found himself in an awkward situation; he needed to catch the tube to work but he didn’t want to bump into Sam again in the ticket office. That would have ruined the moment. So he went and bought a copy of The Sun from a newsagent and tucking it under his arm, made his way back to the station and down into the London Underground.
Luck was with him, he managed to find a spare seat in the carriage of an eastbound District Line train bound for Monument station. He had been this way before. Dressed in the exact same Marks & Spencer suit that he wore now, he had attended open days and graduate training fairs during his quest for a job in the City. Since his decision to work in investment banking, he had attended a number of events. They bored the shit out of him – but they didn’t put him off. He wasn’t going to work in the City because he wanted to be entertained.
It was probably curiosity more than anything that had really spurred him on to apply to all those banks. But it wasn’t a curiosity born of intrigue regarding the inner workings of the financial industry but rather a hunger to know whether he could cope with it, whether he could succeed, whether he had what it
took – oh, and get paid like a bastard while he did so. And if he did, then he could work hard for a few years, make a killing, then get out of the rat race and do what he really wanted to do – whatever that was (he’d have figured that out by then) – maybe even take off on a world tour of his own. This made him smile. He hadn’t even turned up for his first day at work and already he was planning his retirement. What did that say about what he had decided to do? The Sun lay on his lap but he didn’t open it, preferring instead to look around at his fellow commuters as they busied themselves with newspapers, paperbacks and Sony Walkmans. What had driven them to get on this train for the first time? What were their motives? What were their ambitions? And had those ambitions been fulfilled? Were they happy? Did they even have a choice any more? Some of them looked happy enough. But others displayed that ennui so ill-disguised by London commuters, that look of quiet desperation. Would that be him in a few years time? Or months? Or weeks?
At Monument tube station, Al was disgorged onto the pavement, born aloft on the underground’s warm breath. The commuters moved in a pack. But there was no camaraderie, no team spirit as far as he could see. It was every man for himself; every woman for herself too. And there were plenty of women. Young, smartly-dressed, groomed and fragrant. Less than an hour before he had been in bed with Sam and here he was lusting after his fellow City workers. Especially the little blonde there, the tall studious-looking brunette with the short skirt over there.
To banish his carnal thoughts, Al focused on the middle distance, and stared into the City’s maw. As he moved closer, he felt the heavy scenery of charcoal and beige brickwork crowd his senses as it rose up all around, exuding age-old solidity and permanence. 'We know what we’re doing,' it seemed to be saying. 'We’re in control. You must trust us; believe in us.' But did Al believe in this vast ancient edifice, this City of London? That was the million dollar question. Al realised that he knew very little of what the City of London actually did. Learning and believing would be the keys to whether this was the start of a career, a working life, or something that he fell into and would fall out of just as easily. And it was in the consideration of this that Al felt a little jolt of pleasure. Because it didn’t matter if this was a wrong turn. He was young, he could afford to make a couple of wrong turns. It was one commodity that he had in abundance. Time. Al made a mental note; he would always have a choice. He would never get in too deep and he would always remember the relaxed manner with which he had entered this alien world.
At the top of King William Street, Al took in the view: The Bank of England, The Royal Exchange, Threadneedle Street, Leadenhall Street – an ancient scene built as a public relations exercise for the banking industry. These people know what they’re doing. Look at their buildings.
'Trust us.'
Around the confluence of streets, swept along on the tide of moving bodies up Prince’s Street, Al walked beside the windowless cliff that formed the side elevation of the Bank of England. You can’t have lots of windows in a bank.
'Trust us. But we don’t necessarily trust you.'
Crossing the road, Al went to check his appearance in a large sheet of plate glass in the façade of an office building. And there he was, framed, staring back at himself in his new world. The suit would take a bit of getting used to. Some people were naturals in suits. Al wasn’t. He was built for jeans and T-shirts. But today was not a day to cling to preconceived notions. Today was the first day of the rest of his – oh no not that. Anything but that. Today was just another day. It just so happened that it was his first day in the City. His first day in the Square Mile. Christ, what the hell was he doing? It wasn’t too late. If he hurried, he could probably make it back to the flat, grab his passport and get a cab to Heathrow in time to catch the same flight to Bangkok as Sam. If he really turned on the charm with the check-in person, he might even be able to engineer it that he sat next to her.
But that would be cheating himself, cheating his future, a deceit with which he could not live. It was there in his face, staring back at him now. Honesty. Deceit was always a struggle for him, even self-deceit. He had an honest face. People told him that. A handsome one too – he hoped – no, he didn’t hope, he knew he was OK to look at. He wasn’t being conceited. You didn’t end up with a girl like Sam if you weren’t easy on the eye. But there was something in his expression that alarmed him. What was it? He was nervous. That was it. Up until that moment, he hadn’t felt nervous. He had felt some trepidation, for sure, but it was tempered with anticipation, excitement even. But when he looked at himself now, he could see his fear. Today meant so much more to him than he had acknowledged. He was sacrificing his future with a girl he loved for starters. Perhaps it had something to do with his parents. The night before, he had phoned them and they had wished him the best of luck. They were rooting for him. Of course they were. They had always rooted for him. They loved him. And yet . . . There was something. They didn’t feel that he was making the right choice. They didn’t think that he was going to find his niche in the City. Finding one’s niche was something that his father talked about a lot. As a teacher, it was important to him. And there was no escaping the fact that his father and mother felt that he wouldn’t find his niche in the City. This spurred him on, gave him a desire to prove to them that he would. Not through any sense of antagonism towards them or desire to prove them wrong but because he genuinely felt that being accepted by an institution like Trenchart Colville was not only a 'tremendous achievement' as his dad had put it but a pioneering departure for the Denham family. He was taking his gene pool in a whole new direction and as much as he clung to the notion that he was just dipping his toe in the water, he also realised, looking at himself in the sheet of glass, that this was a big deal, a big moment in his life. No screwing up allowed.
On the corner of Gresham Street and Moorgate, directly opposite the north-western corner of the Bank of England, Al went through some revolving doors and into the reception area of Trenchart Colville. Less than three paces across the marble floor and he worried that he might have screwed up already. Under his arm was the copy of The Sun that he had bought at Fulham Broadway tube station. Maybe a tabloid might be frowned upon? Perhaps anything other than the Financial Times would be deemed a faux pas? Luckily, salvation came in the form of a litter bin at the end of a row of seats in the reception area and he casually dropped the offending article into it before approaching the desk.
'Hi, I’m Alastair Denham. I’m here for the graduate training scheme.' The security guard looked up from his copy of The Sun and fixed Al with a kindly expression. It was the same guy who had been on the desk when Al had come for his final interview in the early spring. Surely he wouldn’t remember him?
'Good morning, nice to see you again.'
Seemed he did. Al felt good about that. The security pass he had been given the last time he was there was still in his pocket; he fished it out and passed it to the security guard who took it from him, smiled and tossed it in the bin next to his chair.
'You’re not a visitor any more.'
Al felt reassured, liked the way the guy made him feel like he was expected, like he was somehow special.
'Fifth floor. Go to reception and they’ll sort you out.'
'Thanks mate.' He threw in the mate and immediately regretted it. Was that the right way to address someone at the bank? Even if he was the guard on the front desk. As he walked to the lift, he could hear the doors revolving behind him, heard someone say in an American accent:
'Miles Ratner.'
'Good morning Miles. Fifth floor. Tell them you’re here for the graduate training scheme.'
Al pressed the call button for the lift as he felt his little moment of self-satisfaction wither. Why didn’t the security guard call him by his first name? He and this Miles were clearly both in the same boat in terms of hierarchy. They were both right at the very bottom of the heap. In fact they were clinging to the heap’s bottom; so why did the guard think that one of
them was deserving of special treatment and one wasn’t? There was no getting away from the fact that Al had been treated differently. He wished he hadn’t called him mate now. Or was he over-analysing?
The lift doors opened and Al stepped inside and pressed the button to keep the doors open while Miles Ratner said 'thanks' to the guard – no 'mate' from him – and walked towards the doors. Al expected Miles to walk faster when he saw that the doors were being kept open for him, or at least make some gesture that he was appreciative of the courtesy. But he didn’t – just maintained the same steady gait. He was of a similar height and build as Al but he carried himself altogether differently. Where Al maintained an open, people-pleasing demeanour at all times, the self-deprecatory, northern European front, Miles was an altogether different being. He was closed, contained, absorbed, with dark hair and a tanned complexion that appeared moisturised, tended for. His white shirt collar nestled against his immaculately shaved neck. His suit was expensive and understated with not a single unintentional crease and made Al feel suddenly scruffy in his M&S threads that had developed a concertinaed ridge around the top of his thighs on account of his recent tube journey.
'Hi, I’m Al Denham.' He held out his hand and the hand that reached across and shook it was soft, warm and bone dry.
'Miles Ratner.'
'You’re on the graduate scheme, yeah?'
'That’s right.'
'Me too.'
Al smiled. Miles looked up at the illuminated numbers on the panel above the door. Not a flicker of recognition of their shared destiny.
'Where’re you from?'
'New York.'
Al didn’t allow Miles’s non-reciprocation to develop into a tense pause and pressed on: 'So you’ve moved over here?'
'That’s right.'
'Not tempted to chance your arm on Wall Street?'
'I’m sorry?'
It was the first time that Miles had looked Al in the eyes and now that they were staring into his, Al could see that this guy looked like he could have been a movie star. His eyes were unexpectedly blue against his dark features. But it was a cold blue that faded into the white.