Henry nodded and Charlie turned the radio up. They fell into a comfortable silence.
Henry’s mind drifted towards his trip to New York, trying to anticipate the reason why Douglas McCarthy, CEO of GL, had asked him to join him on his way to the US. DMac, as he had been nicknamed by the market, had spent over forty years in the financial sector. His reputation was as a ruthless man, whose success at the helm of investment banking had been impressive. He was a man of extremes, capable of arguing the most desperate of cases and winning support in the tightest of spots. Henry had been working as one of his few direct reports for nearly three years. He had an affinity with McCarthy that few enjoyed. Henry had developed the habit of speaking his mind and in return was consulted on matters relating to the overall running of the firm. He had won this privilege during the negotiation of a protracted but essential transaction with Morgan Stanley which had put GL on the front pages of the FT and the Wall Street Journal for weeks. Henry had been clever enough to let some of the more senior management bask in its glory, while taking a voluntary backseat.
Upon arrival Charlie had resumed his role of chauffeur, opening the Mercedes’ door and confirming he would be there for the return journey. “Much appreciated,” Henry had said, discreetly placing a £20 note in Charlie’s hand. He was now eager to join DMac. The invitation had been unusually formal. He needed to know why.
Chapter Two
Nancy switched on the news as she was drinking her first cup of tea of the day, a strong Sichuan with little milk. Breakfast TV bored her but she enjoyed the early morning programmes on the Bloomberg channel. She always found snippets of information that would not be repeated during the day, news that was usually very telling to the discerning mind. The Asian commentator was exploring the implications of the announced merger between GL and HXBK and questioning whether this merger between two of the giants of investment banking was not a merger but rather a reverse takeover. Nancy poured herself a second cup of tea and frowned, too much milk. Her mind wandered back to the programme, paying a little more attention. She had spotted her neighbour, Henry Crowne, leaving the block of flats early that morning as she was opening her curtains. She had surmised he was working on the trading floor of a large investment bank hence the early hours and recollected he was indeed working for GL. The commentator speculated for a while as to the reasons for the merger and Nancy got a little irritated.
“A bank the calibre of GL would only agree to merge for one reason, lack of capital, of course,” she said aloud.
Nancy opened up her agenda and looked at the day’s schedule. She had a meeting late morning with a young artist who was hoping for a grant to support her next show. The Bloomberg programme was going nowhere in its exploration of the GL-HXBK story. Nancy switched off the TV and turned her attention to the world of art. She had a few hours to review her notes and make herself ready to meet her young friend. She grabbed a large portfolio of prints that had been left with her and delicately lifted the sheet of light tissue paper protecting each of them. Nancy gave a wide smile, so much talent for someone so young. She forgot all about the news and slowly slid into a world of intensity that engulfed her.
* * *
The bombshell hit all Bloomberg terminals at 11.47 GMT. A short but speculative piece announcing the death of Anthony Albert AKA … AA the recovery man:
In the bitter battle for the reverse takeover of GL and HXBK, a dramatic development has rocked both stocks in this morning’s London session. Anthony Albert, a major figure at HXBK, has been killed in a tragic plane crash. Police are treating the incident as suspicious after several eye witnesses reported what seemed to be an explosion shortly after the plane took off. HXBK and GL have been contacted but so far have not been available for comment.
Henry had been told to prepare his team for the news. They had just walked out of their meeting room when the news hit their screens. James Radlett, Henry’s number two, said aloud what everyone else was thinking privately.
“Hey guys, look at Bloomberg. Mr Recovery Man is famous at last. I am sure the little prick would never have thought it would come to him that way.”
“Not appropriate James,” snapped Henry.
James shrugged whilst most of the team privately enjoyed the rebuff.
Henry was exposed, knowing he must be the last person to have had contact with Albert. Something was wrong, very badly wrong. With a long career on the trading floor Henry had developed the ability to sense danger, to feel and recognise the dark undercurrents of a disastrous situation. Now that the news had settled in, a sense of disquiet had started to rise within him. Then again what could he possibly be scared about? His planning had, so far, been immaculate.
James went back to work whilst Matt, another senior member of the team, cautiously hedged his bets.
“Bad for the stock though,” said Matt, tapping furiously on his Bloomberg terminal to check GL’s latest share price.
“Gee … Well spotted, genius,” replied Harriett. She removed her glasses with a swift gesture, wiping the lenses with the sleeve of her cashmere cardigan methodically. The heavy frame had left two deep indentations below her light brown eyes. She rubbed the soreness away slowly and pushed the glasses back into position.
She had not said a word during the team meeting, Henry had noticed the out of character silence. Harriett had been patient, positioning herself within the firm for the past three years and now stood to be made an MD at the next promotion round as did Matt. Of course, the merger could still ruin their plans and so could any unfortunate associations with a losing leader. Henry was under no illusion that they had joined his team for no other reason than because he could guarantee high visibility. But the death of Anthony Albert could only mean ‘issues’. Henry sat at his desk outside his office. He surveyed his team one more time, as an uncomfortable thought started to settle in. He knew them all well, but then again, he knew his people only within the confines of banking. He had seen them weather some tough situations and difficult people, take knocks and come back up, strengthened by the experience. He had seen them compete against one another and other banks to win the deal and the limelight, but this was different. He had chosen them for their complementary skills and personalities and taken risks in welcoming and training these ambitious characters. Whilst he could normally provide an environment where their various aspirations could be fulfilled, the combination of the takeover and this latest drama would put strain on his ability to keep the team together. He needed some space to think. A cup of tea grabbed from his favourite patisserie would do the trick.
L’Epi d’Or was buzzing with customers. Henry frowned at the idea of queueing. He spotted Marianne serving a young woman. She had multiple orders that would most certainly feed an entire desk of traders. He was about to wave when Marianne grabbed a large paper cup and waved it at Henry with a smile. He smiled in return and gave the thumbs up. Someone in the queue turned around and looked displeased. Henry recognised Cindy, McCarthy’s PA. He shrugged and mouthed ‘sorry’ with a grin. Cindy collected a large paper bag and walked past him.
“H, you’re incorrigible.”
Henry turned back to see her disappear. He had not seen McCarthy since their flight to New York three months ago. The memory of that last meeting made his stomach churn with anger.
He is there once more.
Henry steps into the Gulfstream G400 full of the confidence an indispensable adviser has. The rich smell of leather rises to his nose. This is the smell of unabashed luxury and power. No matter how many times he has flown in the private jet that smell always excites him.
McCarthy is in his seat, documents scattered around him, a cup of coffee in his hand.
Henry has managed before to hitch a ride with McCarthy for a great many of his own client’s meetings. His deals have profile and McCarthy enjoys that association too. Henry’s last $3.5 billion convertible bond issue has been yet another exceptional success.
But times have changed and when McCar
thy lifts his head, he presents a tired face, deep lines etched onto his forehead.
“Hello Henry, how are you?”
“Hello Doug, haven’t seen you for ages,” Henry says.
“I know, should’ve been in touch sooner but I have been considering various options … we’ll talk later … Christie at the back will fix you a drink.”
To McCarthy all stewardesses are called Christie. Henry has never had the nerve to ask him why. He assumes that remembering the name of an air hostess is fairly low on McCarthy’s priority list.
The plane has been in the air for about thirty minutes when McCarthy signals Henry to approach. Henry has opted for a seat at the back of the plane, judging by his boss’s demeanour that he does not want anyone around. Time to himself is precious for McCarthy, whose involvement with the Bank’s affairs is a constant, gruelling 24/7 schedule. McCarthy has been reviewing his diary for what would be a typical visit to the New York office. The aircraft phone rings and Cindy, McCarthy’s PA, is on the phone confirming last minute changes.
“Breakfast at 6.30am with Apple is fine if you tell me that Gary will join us,” says McCarthy whilst inviting Henry to sit down.
“Good. Calls and meetings after that fine but I am not giving up on consolidation time … I need to review the CDO file … don’t care if Steve needs a quick answer. Tell him I am reviewing the figures and that I understand our position on the AAA tranches.”
McCarthy scribbles some notes on the side of his timetable and glances at Henry.
“Yes, I’ll take a late call from the Asian office as long as it does not compromise my dinner with Paulson … At what time does his flight from Washington arrive? Table booked at the usual place? No agenda in writing please, just say collateralised debt obligations.”
McCarthy hangs up and take a mouthful of coffee.
“This market is too fucked up for words. One day I am gonna lose the plot,” mutters McCarthy.
Henry does not envy McCarthy’s CEO position. Rather, he relishes the role of éminence grise, that of favourite counsellor in keeping with the feudal ways of the City. He feels certain that no essential decisions will be taken without his consultation.
“Henry, we need to talk without being disturbed. I’ll get straight to the point. I have been speaking to Roy, our Global Head of Debt. You know we are very stretched at the moment in terms of core capital. We have missed one very large trade and are about to miss another one … you know the story … capital cannot be freed easily at the moment … the situation will not in my view improve … unless you tell me otherwise?”
Capital, capital, capital, Henry knows – lifeblood of any company from multinational to small cap. He nods, there is very little he can add since one of the transactions being turned down is one of his own.
“Well, Doug you know that my team and I have been working on this $5billion structured convertible for months. We can only innovate and convince the market if we take a fair chunk of the deal ourselves. The Hedge Funds want to feel that we believe in our mathematical modelling and our pricing before they commit–”
McCarthy interrupts by waving his hand in the air with a snappy gesture.
“I know all that Henry. I am trying to find imaginative ways of stretching our capital and there are none. We can’t come to market, we would be slaughtered, the share is pricing at US$13.47 down ten per cent. We have used a number of structures to reduce our capital exposure but off balance sheet products can only help so far. The Securities and Exchange Commission and the FSA are going to start asking difficult questions soon … so … what’s next?”
His voice is impatient. He is rehearsing his arguments, a dry run for a future intervention in front of the Board. Henry shifts on his seat, conscious of the uncomfortable distance established by McCarthy.
“I know you know Doug and I am also aware that we have sold all the assets we could,” Henry says with some equal impatience. The subprime investments wrapped into CDOs GL has kept on its books are pulling them down and Henry has warned them about it.
“Are you only now trying to tell me that something major is about to happen, such as a sale?” His voice remains calm but his face has lost some of its colour. If GL is being taken over or merged then Doug has not confided in him.
Henry’s remark brings a spark of amusement to McCarthy’s eyes.
“Well, yes … I am talking about hanging a ‘for sale’ sign in the shop window. You admit yourself that your team will not be able to perform unless we broaden our capital base. Even you, Henry, can’t bloody well deliver a structured solution despite your experience so what else can I do? We have to take the initiative … Force a takeover of the reverse kind.”
McCarthy’s eyes now glow with a mixture of cruelty and excitement at the prospect of what lies ahead. After so many years he is still thirsty for blood.
Henry’s heart starts racing and his mouth has gone dry. He has not felt this taken aback for years. The matter of fact statement, the absence of communication, can only mean that he is not in the running, that he and his team are not a core part of the protracted negotiation process. Henry can feel anger gripping him, an incandescence burning in his chest. Betrayed. Control is essential. He cannot, will not, allow himself to show the turmoil inside. Henry reaches for his coffee, takes a long sip and sits back. The colour has returned to his face, he is calm.
“Mr Crowne … Hello,” Marianne’s voice propelled Henry back into L’Epi d’Or. His hand had been moving in slow motion towards his pocket, fetching a few coins to pay for his tea. Time speeded up again. Henry gave Marianne his best smile and left with the cup of tea warming his fingers. He turned into Gresham Street not yet ready to rejoin his team. He started walking towards Poultry, drinking his tea slowly. But no matter how good the weather and the tea, Henry could not shake the memory of his NY trip.
McCarthy’s voice rings clear in his hear, the arrogance … the coldness.
“I presume you have a counterpart in mind with deep enough pockets or shall we discuss options?” Henry asks.
“A valid question coming from you Henry!” McCarthy still needs his cooperation in the process. “However, I think our options are limited. I told you, I won’t be taken over. I want a reverse, I want to be in the driving seat when I am at the negotiation table … in the interest of us all of course. There is therefore only one bank that can fulfil that role in my view.”
Henry does not volunteer a name. He is still hoping that the forbidden name won’t be spoken.
“HXBK is the only one.” McCarthy’s eyes have not left Henry. The anger is rising again in Henry’s chest, much harder this time to control.
“Are you telling me that you are seriously contemplating a merger with this sleeping dinosaur?”
“More like a sleeping beauty, needs to be awakened – and OK some may not see me as a charming prince but what have I been paying my bloody PR consultants for?”
The deal is done, you motherfucker, Henry knows, just like that.
“So, what would you like me to do now, Doug.”
To be part of the integration committee is vital.
“I am going to ask you one of the most difficult things to do Henry, but I know you well, you will be able to handle it,” McCarthy pauses, take a sip of coffee before putting the cup slowly back in the saucer.
“I want you to do nothing.”
Henry goes to stand up. His seatbelt stops him dead. He unbuckles it with rage. He is now towering over the older man who remains impassive. McCarthy looks up into the younger man’s face without the faintest hint of emotion. His faded blue eyes don’t blink. Had Henry been in a room, a car – damn even a boat, he would have walked, swum … but at 10,000 feet his options are limited. He sits down again.
McCarthy has organised the meeting wisely. Mind manipulation, also referred to as ‘coaching’ in most leadership courses, is a strong skill of his and for the seven hours the flight lasts Doug ‘coaches’ Henry into his way of thinking.
<
br /> * * *
At home, Nancy was still going through the portfolio of prints, meticulously taking notes on each of them and only looked up when her doorbell rang. She grabbed her BlackBerry to check the time. The bell rang again. It had to be a lunchtime delivery but she was not expecting anything. She gave a sigh and moved to the intercom.
“Yes, can I help?”
“A delivery for Mr Crowne,” replied a polished voice.
Nancy was intrigued. It was not the usual coarse greeting of a courier eager to get to his next job.
“Is he expecting you?”
“I had arranged to deliver late morning, so that he could take the time to look at the painting during his lunch break.”
“I am coming down,” replied Nancy.
Could Henry also be a collector? She arrived at the main entrance door to see a well-dressed young man in a hat. He was carefully balancing a large painting covered in bubble wrap.
“I am happy to take delivery for my neighbour. But you must let me see the piece. I can’t contain my nosiness,” said Nancy with an engaging smile.
“Certainly. It is rather contemporary,” the young man replied hesitantly. “I am Phillippe Garry by the way.”
“The wilder, the better.”
Nancy and Phillippe engaged in a lively conversation about galleries and artists, while he unwrapped the piece destined for Henry. He said nothing more, but positioned the painting on one of Nancy’s sofas.
Nancy sat down for a few moments, stood up and walked away without losing sight of the piece. She came back, sat down again.
“The Raft of the Medusa. A powerful rework of Géricault. Who is the artist?” she asked, admiring the daring interpretation.
“Tom de Freston. A very promising painter we represent.”
“Why the Raft? It was a controversial painting in 1819 when exposed in Paris. The story of this shipwreck caused much embarrassment to the newly restored French monarchy. I am right, n’est ce pas?”
Collapse Page 2
