Shadow Banking

by C. M. Albright

  ‘Whichever health club he joins,’ said Fergal dabbing at the glaze of sweat in which he was basted, ‘you can bet it’ll have a nice bar.’

  They arrived at an apartment building in the mid-levels. The air conditioning had cooled Fergal down enough that the blast of humidity caught him unawares when they climbed out of the taxi. He felt wrung out as they made their way through the lobby carrying all his worldly possessions.

  As they waited for the elevator, Rhys and Fergal looked at each other in the mirror between the double set of elevator doors. Considering he had only been in the place for a couple of days, Rhys was already looking as though he had reached some sort of understanding with the heat, some sort of compromise. Fergal looked as though he had wilted a little, his limbs and joints were thrown out of kilter so that he stood as though struggling with the forces of nature which were urging him to collapse.

  ‘They’ve got some great tailoring out here, Fergal. Good value. Even you can look smart here.’

  ‘I find that very hard to believe. I mean, would you look at me? I look as though I should be in a crime scene photograph.’

  ‘The Aran jumper was not one of your better ideas.’

  ‘Believe me, Little, I can see that now.’

  The apartment was small but immaculate in a slightly sterile, hotel chain way. Fergal was mesmerised by the view from the 31st floor of Victoria harbour across which the Star Ferry was making one of its regular journeys between Hong Kong Island and Kowloon. This was his new home. This was the crucible for his forthcoming extravagances and excesses. It certainly looked exciting enough. And more important than that, it was new, different, like nothing he had ever experienced before.

  ‘I’ll see you in the morning, Fergal.’

  Fergal turned away from the floor to ceiling window to see Rhys make his way towards the door. Fergal couldn’t help himself, the alcohol level in his system coupled with the feelings prompted by his new arrival made him feel emotional. He strode across to Rhys and put his arms around him for the second time that morning.

  ‘I love you, man.’

  ‘Yeah, it’s great to see you Fergal.’ Rhys’s face was pressed against Fergal’s moist chest. ‘See you in the morning.’

  ‘Yeah, see you in the morning. It’s so great to be here. We’re going to have fun here, my little Welsh friend. Just you see if we don’t.’

  ‘Yes, OK.’ Rhys was attempting to disengage but Fergal held him tight.

  ‘Thanks for coming to get me from the airport.’

  ‘No problem.’ Rhys managed to break Fergal’s grip and made for the door at speed.

  ‘You don’t fancy going for a drink do you?’

  ‘Fergal, it’s nine o’clock on Sunday morning. I’m not really up for a drink now. Look, why don’t you just get your head down for the day and sleep off your jet-lag and hangover and then you’ll be nice and fresh for your first day tomorrow.’

  ‘Jesus, Little, you’re the most sensible person I’ve ever met. But maybe you’re right.’

  As they said their goodbyes and Rhys pulled the door to the apartment closed behind him, Fergal finally took off his Aran jumper and turned back to the window and the mad city below.

  Nikkei: 18210

  USD/DEM: 1.7715

  USD/BRL: 1.083

  Twenty one hours later, Fergal was walking through the doors of the Development Bank of Hong Kong in Lok Ku Road. He took the elevator to the 26th floor. Although he still had a latent feeling of fever and nausea which he had struggled to shake off the previous day despite or possibly because of the beers he had consumed wandering around Lang Kwai Fong the evening before, he certainly looked the part. His suit was from Austin Reed and accentuated his stature. As he stepped out onto the trading floor, he felt like a giant. He was a giant.

  ‘Basher, welcome,’ said Keith when he saw him on the trading floor.

  Keith ignored the hand that Fergal proffered and gave him a bear hug.

  ‘Look at the state of you. You almost look as though you might know what you’re doing.’

  It was good to see Keith. Despite the perennial ribbing that Keith gave him for everything from his lack of success with women to his poor taste in clothes, Fergal knew that there was a fundamental bond of friendship between the two of them. Keith was a hard man who wouldn’t suffer fools but once you were his friend then you were a friend for life.

  ‘Twin Peaks, how you doing?’

  Keith chuckled: ‘I’d hoped I’d left that nickname behind in London.’

  ‘Why? Your tits haven’t got any smaller.’

  Keith and The Little Fella introduced Fergal to the team: Anthony Cheung, the chief dealer who Fergal knew after Anthony’s recent trip to London and his disparaging remarks about the quality of London’s ‘filth shows’; Michael Tsung, a fellow spot trader; David Dunn, who had worked on the forward desk at Trenchart Colville in London and was well aware of Fergal’s legend; Arnold Leung who was a dealer in Asian currencies; DK Yoe, a Korean who Keith whispered as an aside would be a good boy for after hours fun and games – ‘The Koreans are the Irish of Asia’ – and Denise Lam, an attractive Singaporean who traded Sterling. As soon as Fergal saw Denise, he felt himself blushing, clamming up, his usually reliable comedy mojo deserting him, leaving him tongue-tied and bright red.

  That night, Keith took Fergal and The Little Fella out on the town. During the negotiations and due process between DBHK and Trenchart Colville, Keith had visited Hong Kong a number of times and already had a handle on the night life. They started off at the China Club for dinner, then went for drinks in the Captain’s Bar at the Mandarin Hotel. The tone of the evening rapidly headed downmarket as the beers began to kick in and by the end of the night they were in Joe Bananas in Wan Chai.

  The myriad specks of light from the glitter ball spinning above the dance floor sparkled in Fergal’s eyes. He smiled awkwardly at the beautiful Chinese girl who smiled back at him despite his ludicrous dance moves. As he looked across at Keith and The Little Fella at their well stocked table, he waved, and they grinned at him and waved back, Keith nodding at the Chinese girl who was moving closer to Fergal as though to say: ‘Get in there.’ Fergal was going to love this place.

  USD/RUB: 6.278

  FTSE: 5264

  Brent Crude Oil: 20

  He was good at trading Dollar-Yen. Keith’s encouragement and belief in him gave him confidence and soon he gained a reputation in the market even amongst the Japanese banks. Ex-pat life suited him, just as it had done in London, although this was far and away more exotic and hedonistic. He was trading far more actively than he had in London given the size of DBHK’s client base in the region, and outside of the office he was equally busy. Keith and Fergal were introduced to an entire new network of people across Asia and Fergal learned the rules of the game. Fergal soon realised that in Asia you weren’t liked until you were respected. So however much he enjoyed the Hong Kong night life, he never allowed it to compromise his growing standing within the industry. It was a steep learning curve but he relished the challenge and as his profile rose and his network grew, he realised that he was being invited to more and more social events. It wasn’t long before both colleagues and clients had Fergal stories aplenty, tales of memorable nights culled from business trips to Tokyo, Seoul, Singapore, Kuala Lumpur and Shanghai. Apart from an unfortunate incident when he accidentally head-butted a senior executive of Toyota while trying to observe the Japanese custom of bowing, he rapidly became a star employee and though the trading floor environment was very different from the one he was used to in London, he still managed to export his own brand of amusement to the far east. Rarely did The Little Fella travel anywhere without finding some little surprise in his luggage after leaving it unattended by his desk and vulnerable to Fergal’s twisted imagination. It might be an enormous dildo wrapped in tin foil in his hand luggage or a stuffed gerbil in his sponge bag; it might be some bizarre pornography, or maybe just a rock.

  When it came to
the inevitable women that Fergal met in the strip clubs and bars that he ended up in some nights, he knew that they were only after his credit card. He enjoyed their attention nonetheless. It was prostitution, yet somehow it felt different out here. It didn’t feel seedy and desperate as it might have done in London. It was somehow more honest. What was his job if not prostitution? Fergal was getting laid for the first time in years. And whereas he knew there would be those who would describe his behaviour as the worst kind of cultural imperialism and sex tourism, he couldn’t stop himself – or didn’t want to. Occasionally his inevitable hangovers put him in a particularly self-lacerating frame of mind. A case in point was the morning after a night he had spent with Keith in the legendary emporium in Singapore known as the Four Floors of Whores. A game of poker had got out of control and in one hand they had staked not only each other’s ‘brasses’ but had made them sit on the table alongside their chips. What would his mother think if she could have seen him now? But any recriminations he might have felt were nothing that he couldn’t assimilate as memories of his starring role in his own private fantasies played out in his mind.

  Fergal loved his new life; Hong Kong was everything that he might have wished for and more. Just as he had hoped would be the case, his awkward tongue-tied manner in front of Denise Lam soon fell away as he got to know her and they developed a friendship. As well as beautiful, she was fiercely intelligent and had a fiery, ballsy temperament that he found irresistible. When Keith was recounting the inevitable funny stories about their night-time antics on the trading floor, Fergal found himself hoping that Keith would avoid any details that might make mention of women they encountered. He needn’t have worried. Keith loved the banter but he was always discreet. What it proved though was that Fergal was becoming increasingly conscious of Denise’s impression of him. Theirs was more than just a friendship. He could feel it, and he felt certain if her demeanour was anything to go by, it was something that she felt too. In his heart, he knew that he would give up all the socialising and carousing for her. And this, for Fergal, was an unusual and sobering thought.

  14 The High Roller

  Nasdaq: 1905

  USD/JPY: 120.65

  5Y US swap: 6.32%

  Al pulled up outside Claridge’s, climbed out of the cab and paid the cabbie with a hefty tip. Inside the lobby, he looked at himself in the mirror by the lifts and adjusted his silk tie. His clothes were understated but quite clearly expensive to the trained eye. On his wrist was his favourite new purchase, a Tag Hauer Carrera Calibre. No longer the promising youngster, he felt as though he was moving up in the world – and he was trying to look it too.

  Having secured his new position at Hartmann Milner, he had decided to relocate from his small one bedroom flat in Fulham to a larger place in Chelsea, a two bedroom ‘luxury apartment’ as the estate agent’s literature had put it, tucked away in a side street just around the corner from Imperial College. It wasn’t luxury, it was just a standard two bedroom flat but it was a great neighbourhood. He could fall out of a bar on the Kings Road and be home in five minutes. And more importantly, he had bought it. Two hundred and fifty-five grand. When he made the mortgage application, he felt like an imposter. How could he be applying for a mortgage of that size? And all on his own. But the application sailed through and despite the nightmare stories that he had heard about broken chains and shark-like estate agents, the purchase was painless and when he picked up the keys and drove over there after work in his new Beamer he relished the feeling of sliding his key into his lock, in his front door that opened out into his new ‘luxury apartment’. He owned it, it was home – and a bloody good investment to boot. You could never go wrong with buying property in London. Despite the fluctuations in prices and the negative equity problems of the early nineties, the London property market, particularly in a place like Chelsea, had proved itself to be uniquely robust.

  But all of that counted for nothing compared to this evening. This was the first big test of his tenure at Hartmann Milner. The reason that he could afford the flat, the car and the watch was because of meetings like this. He was on his way to meet his boss, Vittorio Nesta, the Head of Leveraged sales at Hartmann Milner, who was going to introduce him to ‘the Count’ – Count Boris Wenzel – one of Hartmann Milner’s biggest private clients.

  In the lift, he replayed what Vittorio had told him about the Count when they had spoken that morning.

  ‘The reason that the Count likes dealing with us, Al, is that we don’t fawn over him. He likes being one of the guys. He likes being in the market. He likes someone telling him ‘I don’t agree with that’. He likes to go to the Grand Prix with a couple of other big punters and hang out. He likes nothing better than a conspiratorial dinner. All the others in banking that he meets are terrified of him. ‘We mustn’t annoy him. We can’t cock this up. He might fire us.’ We’re not like that. We don’t behave like that.’

  It felt as though Al was an actor and Vittorio was his director. He knew that it was an important gig. Vittorio didn’t need to warn him of the perils of getting the situation wrong. The Count might not have liked people fawning over him but he hadn’t accrued the wealth that he had by indulging fools. There would be no rehearsals, Al would need to nail it in one take.

  When he arrived at the suite, he was met at the door by a tall man dressed immaculately in pinstripe trousers and waistcoat. Was this the Count? Despite Vittorio’s verbal briefing regarding the Count’s business details, he had omitted to give Al any visual description.

  ‘I’m Al Denham.’

  ‘Please come in Mr Denham, Count Wenzel is expecting you.’

  ‘Thanks.’

  As Al entered the suite, he felt intense relief that he had not enquired of the man – who was clearly the Count’s butler – if he was the Count himself. This was a new world he was entering and he needed to keep all social faux pas to a minimum. Al followed the butler down a short corridor to a room that had a grand piano in one corner and in the other, a table and chairs at which Vittorio was seated next to a handsome man in his mid-fifties. He looked as though he might be a film star, tanned and healthy and comfortable in his skin. Vittorio looked very much the same. Two matinée idols sitting down to have a chat. They made Al feel pale and Anglo-Saxon by comparison. Vittorio looked across at him as he approached and stood up.

  ‘Thank you Barrs,’ said the Count, addressing his butler. Barrs nodded and walked away while Al and the Count shook hands.

  ‘Al, this is Count Wenzel,’ said Vittorio. ‘Al’s recently joined us from Trenchart Colville. We’re very happy that he has. We think he’s going to be a great addition to our group. And he’s going to be part of the team that looks after you.’

  The Count nodded. Al nodded at the Count and smiled. Did he appear too eager? Too late, it was done. Al’s hands felt clammy. Vittorio had said that morning: ‘You probably haven’t met anyone like the Count before’ – Vittorio knew that he hadn’t, Trenchart Colville didn’t have clients like that – ‘he isn’t paid to do what he does. He does it for fun. He’s like a smallish hedge fund but it’s his own money and he’s the sole proprietor.’

  The Count looked at Vittorio, and clearly continuing the conversation they had been having as Al arrived, said: ‘Yes, so it was nice. A good boat. About two hundred and fifty feet and we went from St Tropez to Capri.’ His voice was rich, Germanic, a product of impeccable Lichtenstein aristocracy.

  ‘That’s a great trip,’ said Vittorio.

  ‘And you?’ asked the Count.

  ‘We stayed at the villa in Tuscany. Just the family, very relaxing.’

  ‘And Al,’ said the Count, turning to look at him. ‘Do you like to travel?’

  At that moment, Al realised something that he had probably known all along in his sub-conscious. The location of his holiday was crucial to his job. It was important where he holidayed. Luckily he was OK.

  ‘I went to Marbella.’

  ‘Ah, did you go to Le Tricyclet
te?’

  Al had heard of Le Tricyclette. He had nearly gone there with his new girlfriend, Sophie, but hadn’t been able to get a table. For a moment, he thought he might lie – it was clearly a favourite restaurant of the Count’s – and that’s why he didn’t. It was far too dangerous.

  ‘To be honest, we spent more time crawling along the front at Puerto Banus before finding a venue for the evening’s festivities.’ Any worries that he might have said the wrong thing were banished as the Count’s face lit up and he said, ‘Good call. Much more fun.’ And then he dropped his voice to a whisper so he wouldn’t be overheard: ‘Many more women.’ The Count chuckled and seemed to relax, settling back into his chair as he asked Vittorio: ‘So what do we think about the fall out from the Asia crisis? Where do we go from here?’

  Vittorio said, ‘It’s very interesting. I know that Al’s got some thoughts on it.’

  He was on. This was why Vittorio had hired him. This was what he was worth. Don’t screw up.

  ‘Well, there’s no point raking over what happened. The collapse of the Asian currencies was clearly driven by vastly over-leveraged domestic balance sheets, widespread corruption and far too much debt. The IMF has put the money aside to bail them out but going forward it seems to me that the most vulnerable country now is going to be Japan given its increasing reliance on the rest of Asia for trade.’

  So far so good. He’d provided a little context. Not too much. He was telling the Count what he already knew but it was a preamble. Now he needed to focus his argument. ‘I can definitely start to see a process which will result in some aggressive Yen weakness; we could see some significant performance from the carry trade. Russia also concerns me. It’s going to get very illiquid as all emerging markets do at some point.’