Shadow Banking

by C. M. Albright

Karl looked up at Miles as he entered the office. He was on the phone wearing his headset. He gestured to the chair and Miles sat down opposite him, taking in the view out across the rooftops of Mayfair. Karl’s desk was littered with framed photographs of his family. Lots of blond Swedish people of varying ages. Karl never spoke about his family; he never spoke about anything really, other than business.

  Miles had learned a lot from Karl in the past twelve months, especially during the first few weeks which happily coincided with a full blown financial crisis in Asia which presented them with a multitude of opportunities. It was clear from the outset that the crisis was going to have far-reaching implications for the global economy. A combination of over-indebtedness, corruption and cross holdings meant that when the economies across Asia started to unravel in July 1997, things came to a head with frightening rapidity. Investors ran for the exits leading to an old fashioned run on the currencies. Miles knew that to maximise this opportunity he needed local knowledge. So, out of the blue, he called up JJ Pietersen from Trenchart Colville who was now at a senior level with DBHK. JJ fixed up meetings with various central banks and government officials in Thailand, Indonesia and Singapore. Miles went over there with Toni Velasco. She seduced him on the first and only night of the thirty-six hour trip and by allowing her to do so he had committed the error of – as the Brits put it – shitting on his own doorstep. But he couldn’t help himself and besides, Toni was discreet. She even bothered to tell him after they had finished a sleepless night in the hotel room in Tokyo that it would never happen again. He didn’t bother questioning her about this. If that was how she wanted to play things then so be it. That was fine by him. They both had more important affairs to consider.

  On their return from Asia, they started to increase their local currency shorts, as well as buying dollar call options that created large leveraged profits when the Asian currencies collapsed. He put much of this business through DBHK, while encouraging JJ to go long dollar Asia for the bank’s proprietary books. In effect, Miles was using DBHK to drive higher the market that he was already very long of. The subsequent collapse in Asian governments and their accompanying currency weakness gave Galbraith Partners a spectacular start to trading and set up the fund to not only out-perform their most ambitious forecasts but put them in a position of strength to raise yet more capital. And now it looked as though there was another crisis brewing, this time in Russia where things were looking increasingly vulnerable. Despite all the protestations to the contrary from Yeltsin and his cronies, the Rouble looked set for collapse. If it did, that would be absolutely fantastic.

  ‘How’s it going, Miles?’ asked Karl when he had finally slung the headset on the desk at the end of his call.

  ‘It’s good. What’s up?’

  Karl ignored the question – ‘Where are you with everything?’ – making out he wanted to talk business. Miles could tell that this was a preamble to something else but he played along.

  ‘I’m still concerned there’s a few over-levered funds that could have some real issues. As you know, I’ve reduced peripheral leverage and I’m all ready to take advantage of a Russian blow-up and a subsequent collapse of carry trades. I’m already long dollar puts against both Yen and Swiss and I’m waiting for it to break out so I can really ramp up the risk.’ Karl was nodding at him; Miles could tell that he wasn’t really listening. Miles wasn’t telling him anything that he didn’t know already. But the Swede nodded: continue.

  ‘I’m also looking at a few internet companies but only those where I know the management and have some inside knowledge. As far as I’m concerned, the Nasdaq’s just a shit-storm of faceless web sites, so I think information is the key.’

  That appeared to be enough. Whatever it was that Karl wanted to say to him after this somewhat pointless preamble was about to be revealed.

  ‘I need to talk to you about Hugh.’

  So that was it. Hugh. The little shit. He hadn’t come in again that morning and couldn’t even be bothered to call in with some lame excuse like he had a migraine or something. It had gone beyond the ‘shape up or ship out’ stage. The useless fuck just needed to get himself a job somewhere else.

  ‘Yeah, he’s got to go,’ said Miles. ‘I’ve tried with him but he’s just a flat-out waste of air. I’ve even started telling him now—’

  ‘He committed suicide.’

  It wasn’t quite the same wording as the sentence that his mother had said to him when she informed him about his father. ‘He tried to commit to suicide,’ were the words that she used. But it was close enough.

  ‘Shit.’

  ‘Jumped off the top deck of a multi-storey car park last night after work.’

  With Miles’s father, it had been pills, sleeping tablets. He vomited them up. He couldn’t even get that right. Miles cast his mind back to the afternoon of the day before. Hugh brought him some paperwork from the back office to confirm a number of trades. It was long overdue already and as soon as Miles looked at it, he could see that Hugh had provided the incorrect information. Again. Miles didn’t particularly like drinking at lunchtime but it was something that he had to do from time to time. He had been to Langhams earlier with some British film finance guys who were trying to buy themselves a place at the table in Hollywood. He had had a few glasses of good Rioja. It was enough to let his temper off the reins. When he had asked his assistant: ‘Hey Hugh, what’s it feel like to wake up every morning and realise that you’re a useless fuck?’ he hadn’t thought much of it. He had said similar things before. Hugh had just blushed and smiled with that goofy: ‘I’d lose my head if it wasn’t glued on,’ expression. But maybe Miles’s comment was the final straw? Then again, Hugh must have been messed up anyway. It couldn’t have been that alone, could it?

  ‘Should I be feeling guilty?’ asked Miles.

  ‘About what?’

  ‘Well, I got pissed at him a lot.’

  ‘By the sounds of things, everyone was getting pissed at him a lot. He was out of his depth. I think, all things considered, we gave him a fair shot. Just terrible obviously that he should make this decision. There must have been some underlying psychological problems that none of us were aware of. We’ve checked that there was nothing in his profile to indicate that he might have been capable of doing something like this. So it’s just a terrible tragedy that no one could have foreseen.’

  ‘I called him a useless fuck.’

  Karl took a deep sigh. ‘Don’t sweat it, Miles. We all called him things. He was clearly a very unhappy and unstable person. It’s very sad but it’s nobody’s fault.’

  ‘I take it we’re sending something to the family?’

  ‘It’s all being taken care of.’

  ‘Tragic.’

  ‘Yeah, tragic.’

  Miles and Karl looked at each other and nodded. Karl allowed himself a half-smile. ‘When we’re selling the crap out of a currency, we don’t think about the people whose quality of life might be compromised by that action, do we?’ Miles didn’t even bother to shake his head. ‘We don’t care, it doesn’t register. There’s a mis-pricing that we believe is there so we’re going to force it. It’s just that we have seen the opportunity first.’

  ‘I do it because I can,’ said Miles.

  ‘Exactly. You make your trade and you deal with the consequences. Same with Hugh.’

  ‘Will there be an enquiry?’

  ‘You may need to have a quick word with the police later on. Just a formality.’ ‘I guess I shouldn’t mention the ‘useless fuck’ line.’

  ‘I guess not. There’s bound to be an inquest but it’s nothing for us to worry about.’

  Silence ensued as both men sat and thought. Karl broke it: ‘Anyway, the COO will get on the case and provide a replacement as soon as possible.’

  Karl leant forward and glanced at his computer screen. That was it. Hugh was dead and now Karl was winding up the conversation.

  ‘Thanks for telling me, Karl,’ said Miles standing
up.

  ‘No problem, Miles. See you later.’

  Miles returned to his desk. He allowed himself a few moments to look around the office. The atmosphere was very different to how it used to be at Trenchart Colville. The sheer volume of the banter between colleagues was gone but the vibrancy, that feeling in the air, though more low frequency and hushed, was far more charged. Miles loved the electricity in the room; he was a part of it, it flowed through him. He looked across at Toni who was wearing a figure-hugging Gucci number and sitting over by the window in deep conversation with the company’s lawyer, a large Teutonic lady in her mid-sixties. Toni was motionless, watching the woman as she spoke. Miles couldn’t hear what they were saying, it was too far away.

  Toni was worth more than him on paper. Much more. For now. And politically she held greater power. That night they had spent together in Tokyo had been passionate in a pornographic sort of way. Miles couldn’t help but think that he had been defeated in some way. It was as though this solitary seduction was conducted in order to let him know exactly what he would be missing from here on in. Just watching her as she sat there, listening, attentive, focused, all the channels open; he wanted to walk across to her, rip off her dress and mount her over the back of the chair. No foreplay, nothing. The corporate lawyer could watch if she liked, he didn’t care.

  Since Miles had been at Galbraith Partners, he had started to collect Swiss watches. No Rolexes or Patek Philippes. He preferred the more obscure Swiss manufacturers. He looked at the watch he was wearing; it was a Hublot. It’s elegance never ceased to please him. Watches had become something of an obsession. His new car was an Aston Martin DB7. Recent vacations included skiing in Courchevel, Verbier and Aspen; and driving the Aston across Europe was an unexpected pleasure. He found himself increasingly drawn towards the mountains, particularly the Alps, and because a large concentration of the fund’s capital was Swiss in origin, he got to spend a lot of time in Geneva, Zurich, Zug and Lugarno.

  Miles took out his cellphone and put in a call to someone else who also liked watches.

  ‘Hartmann Milner, good morning.’

  ‘Hi, I’d like to speak to Al Denham.’

  16 The Drive-by

  USD/RUB: 6.278

  Silver: 4.95

  USD/CAD: 1.521

  Krystina had tried to get him into bed when he had picked her up from the flat. She ambushed him as he did some last minute packing. But they were late already; Al couldn’t afford to miss the flight. There wasn’t another one until the following morning and they were only going for two nights. It was at least a year and a half since he and Miles and Fergal had all been together and he didn’t want to miss a minute of it. As much as having sex with Krystina was as appealing a proposition as ever, they had to get to Hvar.

  They had only been together for a few weeks now but the intensity of the sex showed no sign of abating. Al had never known anything like it. Krystina was the most enthusiastic and adventurous woman he had ever been with, sexually speaking. Maybe her behaviour had something to do with her being an actress. With Kristina, it was all about self-expression. She had already starred in a couple of well-received independent British films after the soap opera in which she had appeared in her native Greece. And now she had an agent in LA who was succeeding in building a groundswell of interest in her talents stateside. But she was interested in more than just acting. She painted, sculpted, sang. She had sex as though it was the end of the world, as though she had to squeeze in as much carnal pleasure as possible before Armageddon came down.

  ‘This car feels glued to the road,’ said Krystina as they made their way through the suburbs of West London on the A40. She had never made any comment about his car before. She wasn’t interested in cars. Or hadn’t seemed to be.

  ‘Yeah, it does.’ Al glanced at her, frowning. She sat there in what there was of her summer dress, blond hair blowing in the gentle onrush of air through the sun roof. She smiled at his querying expression and he reciprocated.

  ‘It could almost be a Ferrari.’

  ‘It could be Krystina but why are you so interested in my car’s handling all of a sudden? You’ve never shown any interest in it before. What is it that you said about ‘boys and their toys’ the other day?’

  ‘Not all boys are like that.’ She wore that mischievous smile that he had come to know only so well and her right hand was on his thigh and moving north.

  ‘Krystina, what are you doing?’

  Sophie, Al’s girlfriend before Krystina, had wanted marriage; she wanted children, and the strange thing was that he did love her. In a way. He just couldn’t help feeling that she was obsessed with trivia. It annoyed him. It had all come to a head one night when she was banging on about a friend of her mother’s. He’d had a couple of pints after work and he couldn’t keep a lid on his temper.

  ‘Look, Sophie, I’m used to trading millions of dollars a day, I haven’t got time for this bullshit.’

  Al knew that he sounded like an utter prick. She had stood up in the restaurant – Brown’s on St Martin’s Lane – and stormed out. She had expected him to follow her. He didn’t. When they spoke on the phone the following morning, he let her vent her feelings about him – he was self-centred, obsessed with his job, he never had time for her, he’d changed – and all he could do was agree. It was easier that way. It gave him a get-out. Things were moving too fast. He wanted children too, one day. But not yet. Hartmann Milner was opening up a whole new world to him. He was enjoying the rarefied atmosphere, moving into another realm. He had worked hard for what he had got, no point not enjoying himself.

  Krystina rubbed the front of his trousers until Al realised that one wrong move could result in children no longer being an option. The only way of releasing his discomfort was to relinquish control and allow Krystina to get busy.

  ‘Krystina, what are you doing?’

  ‘What do you think I’m doing?’

  ‘Don’t, now come on.’ But it was useless objecting. His lust robbed him of his ability to deny Krystina. How could he say no to her when every fibre of his being was screaming yes.

  ‘Hold her steady,’ she whispered as she undid her seat belt, leant forward and took him in her mouth. They were by now on the elevated section of the M4 driving west between the gleaming office blocks. Al wondered whether the people at their desks in the buildings and the drivers of the cars all around could see what Krystina was doing to him as he sped past. The fact of the matter was that he didn’t care if they could. Didn’t care about much at all at that moment.

  The trip was something of a first for Al, Miles and Fergal as it would be the first time that they had ever met up socially like this, the three of them with respective partners. Fergal was bringing Denise Lam with him, a currency trader from DBHK with whom he worked and Miles would be with Lyudmila Romanova, a Russian model and sometime socialite. The social chemistry of the weekend was clearly something that had been preying on Fergal’s mind too because once everyone had arrived at Miles’s place and Lyudmila had offered to show Krystina and Denise the gardens of Miles’s new villa, Fergal said: ‘Who’d have thought it, eh? Look at us, all loved up.’

  ‘How much did you pay her?’ asked Al, taking a cold beer from Miles as they stood on the veranda that overlooked the verdant gardens from which rose the sweet aroma of lavender and rosemary.

  ‘I can’t help it if I’m gorgeous.’

  ‘You are gorgeous, Fergal,’ said Miles, passing him a beer. Al couldn’t think of a time when Miles had appeared more happy and playful.

  ‘To us.’ Al raised his bottle of beer and his friends did likewise. ‘Here’s to your new home in Croatia.’ Miles smiled at him and took a swig from his beer.

  ‘Here’s to us all getting lucky,’ said Fergal taking a slug.

  ‘So tell us about Lyudmila,’ Al said to Miles. ‘Been seeing her long?’

  ‘About six months. We met in Moscow, I was there on business. But what about Krystina? She’s hot.’


  ‘Thank you.’

  ‘Yeah, you cheeky fucker,’ said Fergal, ‘accusing me of paying for it. What about you? There’s no way that she finds your personality that scintillating.’

  ‘The fact of the matter is, Fergs, she can’t keep her hands off me. She’s the

  most sexually adventurous woman I’ve ever met. I wouldn’t be at all surprised if she didn’t try and get either Lyudmila or Denise into bed over the weekend. She’s just like that.’

  ‘You’re kidding,’ said Fergal, finding it impossible to hide his instant fascination.

  ‘To be honest, I can hardly keep up and I’m worried that my sexual tastes are too conservative for her.’

  ‘Go on then, spill all,’ said Fergal sidling up to him.

  ‘All I’ll say, Fergs, is that she’s been trying to involve other women for some time now.’

  ‘Oh Jesus Christ. I’m packing a semi at the very thought.’ Fergal thought about this for a moment and then added: ‘No offence of course. She is fucking gorgeous.’

  ‘What about Denise, Fergs?’ said Miles. ‘She’s a beautiful woman.’

  ‘She is, I’m very lucky. We’re all very lucky. I’d want to sleep with any or indeed all of them. Many times.’

  ‘Thanks Fergs.’ Miles grinned.

  ‘But the thought of Krystina possessing a ... a ... a voracious sexual appetite for man and woman fattens me up I have to say. So Al, go on, what does she like to do?’

  ‘Fergal, if you really think that I’m going to give you the gory details then you’re sadly mistaken.’ Al laughed and clapped Fergal on the back.

  ‘Oh go on.’

  They were all three of them laughing now. It felt good. Al had worried that perhaps they were drifting apart. It was bound to happen after they had all left Trenchart Colville. But their easiness with each other and ability to fall back into the old banter was proof that their friendship was as solid as ever. Al’s relationship with Miles was altogether different from his relationship with Fergal – they were different sorts of friends – but when all three of them were together, Fergal seemed to make Miles relax, lighten up. It would be a good weekend.