He was due at Aden Partners at noon. He was half an hour early, so he took a walk through the little provincial town, past the faceless windows of the offices set back high above the shop fronts. It was almost inconceivable that such vast amounts of assets from all across the globe were being managed behind such inauspicious and altogether modest façades. Miles made his way to the lake and looked out across the flat calm waters on which seagulls, moorhens and yachts floated on the still glass surface above which lay an ethereal mist. It felt so quiet. This was not a place of traffic, heavy industry or any other loud human endeavour. This was a place where thought was devoted to the management of capital. The silence encouraged quiet contemplation. Miles breathed in – drank – big lungsful of clean Alpine air and felt a Zen tranquillity descend upon him. He tried to empty his mind, banish the flow of thought in preparation for the meeting but one thought kept returning to him and that was of Rob Douglas back in the early days of Trenchart Colville who had told all the graduate trainees that one of the qualities of being a good trader was to want without wanting. Looking across the lake as the water slapped almost imperceptibly against the hulls of the yachts, he knew that he wanted this and he didn’t want it at all. Glancing at his Franck Muller watch, he saw that it was five to twelve. Turning away from the serene waterfront he walked the few yards up to the corner of Rigistrasse and Gartenstrasse and the understated offices of Aden Partners where he was met by an attractive woman in her mid-twenties who spoke in a finishing school voice and took him through to the office of Artem Babich, the fund’s Ukrainian CEO.
‘It’s a pleasure to meet you, Miles,’ said Artem, as he stood up from a table and chairs on the opposite side of the room to his pristinely ordered desk on which sat a cluster of wafer thin desktop computer screens. A handsome man, prematurely grey in his mid-forties, he was dressed in charcoal slacks and white cotton Armani shirt; his skin was lightly tanned and heavily moisturised. His smile was big and expansive, and said, ‘relax, I like you already.’
‘A pleasure to meet you too, Artem.’
‘Good journey?’
As Miles sat down opposite in the chair that Artem gestured to, he described his brief uneventful journey, omitting mention of his thoughts regarding Al and the events of 9/11 but including his enjoyment of the waterfront by the lake. Artem nodded at the latter: ‘It’s a very agreeable place to spend one’s time.’
After some more small talk, Artem said, ‘So how have things been?’ Miles and Artem discussed markets for a few minutes before Artem asked, ‘Have you got much on in Russia?’
‘To be honest, I have. I’m long a fair clip of Gazprom paper.’
‘The three year?’
‘Yes and the five year too.’
‘In local?’
‘Yeah, unhedged.’
‘Interesting. Who do you know in Russia?’
‘The new deputy finance minister was in my class at Harvard.’ Miles smiled at Artem. ‘I did him a couple of favours back then. We kept in touch.’
‘So you go to Moscow a lot?’
‘I go everywhere a lot. The only way to know what’s really going on is to get out there on the ground, make some friends and look people in the eye, especially after a few drinks.’
After twenty minutes, Artem called in the two senior partners of the firm, Roger Ellwood and Hans Huerliman. Ellwood was a genial American in his early fifties who exuded confidence and experience. Huerliman was much younger, maybe only a couple of years older than Miles and Miles could see straight away that Huerliman was much more guarded. Miles felt there was something a little forced about both Ellwood’s and Huerliman’s smiles. Ellwood’s in particular, was almost a grimace. But Miles would bide his time and wait to see how things developed.
‘Do you fancy some lunch?’ asked Artem. ‘I know a great place nearby.’
‘Sounds good to me,’ said Miles.
‘And then I thought we’d take the helicopter back up to Zurich, save you getting the train and then – I don’t know what plans you had – but I thought perhaps the four of us could have some drinks at my house on the Dolder this evening. What do you think?’
So much for his late flight back to City Airport.
‘Sounds like a plan.’
Lunch was a lengthy discussion about markets and investment strategy which Miles enjoyed. These guys knew their stuff. He was impressed and he found the discussion refreshing and stimulating; he was genuinely challenged on an intellectual level.
The journey to Zurich was spectacular. Artem piloted the helicopter himself. The alpine scenery was majestic and provided Miles with a few minutes relaxation after the conversational rigours of the day. Making their way through the mountains, suspended beneath the rota blades in their little metal bubble, Miles felt a strange sense of oneness with his surroundings. He had felt it earlier standing by the lake in Zug but it was stronger now. And it didn’t dissipate when they landed on the lawn of Babich’s house overlooking the lake and Zurich beyond it.
After the second round of drinks, Roger and Hans excused themselves and headed off into Artem’s home office to check the markets leaving Miles and Artem seated at a long oak table on the veranda.
The tone of Artem’s voice changed as he said, ‘The content of the conversation we are about to have I would like to keep between the two of us. Do you agree?’
‘Sure.’
‘We’re continually watching the performance of many funds, Galbraith included. It has become increasingly apparent to us that you are primarily responsible for the excellent performance of that fund.’
‘How do you make that judgement?’ asked Miles.
Artem smiled: ‘We know people too, Miles.’ He took a languid sip of his Mersault. ‘As you may or may not be aware, we have invested in other funds and run our own programmes in equities but we have realised we have to broaden our scope internally. Roger is focusing on building a credit portfolio but we need a macro strategy too on FX rates and commodities. May I ask how much capital you are responsible for at Galbraith?’
‘A yard.’ A billion dollars worth.
‘Miles, I would like to start a conversation with you about you joining Aden to run the macro strategy.’
Miles said nothing, just sat impassively and waited for Artem to continue.
‘We have a small number of partners here at Aden with a different fee structure to what you’re probably used to. We’d like to allocate two point five billion dollars to a global macro programme and, assuming conversations went well from both sides, that would be run by the head of macro. If you wanted to, you could build a small team of people but regardless of that, we would pay you twenty per cent of everything you made. Assuming a strong performance in the first twelve months, we would be looking to significantly increase the capital allocated to the macro strategy with a target of five billion in the next two years.’
While Miles maintained his poker face, he did the sums. Assuming he made a ten per cent return on the five billion, he would make five hundred million dollars for the fund and twenty per cent of that would be his. If Miles joined Aden Partners, he stood to earn a hundred million US dollars a year. Miles’s poorest performance at Galbraith over the past five years, however, had been fourteen per cent and his average was twenty one per cent so conceivably, he could be getting paid far more than the hundred million. But Artem hadn’t finished.
‘We’d also like to make you a partner so you’d be entitled to a portion of the management fee equal to 0.5% of the capital.’ Miles calculated that his base salary would start at twelve point five million dollars a year. The figures made Miles’s steely exterior feel vulnerable for a moment and he looked away from Artem to the lights of the city on the other side of Lake Zurich. The numbers had shaken him, not that he would ever show it. Artem was watching him. He wanted him to be impressed; he wanted him to see this as an offer that he couldn’t refuse. But Miles would never show anyone his greed. He felt no greed. He wanted without wanting. They we
re just numbers but they were enough for him to see that this was his future. This was his time. This was what he had been working towards. Galbraith would try and make him stay but they couldn’t even come close to what Aden were offering and even if they could, it was time for a change. He liked Zug; he liked Zurich; he liked Artem Babich’s house sitting here up high on the Dolder looking down on the dark waters of the lake below. There was no avoiding the fact that he was on his way to Switzerland.
‘I’ve got a lot of questions forming in my mind. I’d like to think them through properly and come back to you if that’s OK.’
‘Of course.’ Artem was all smiles again. ‘I’ll be back in a moment.’ With that, he stood up and made his way inside the house leaving Miles all alone on the veranda.
When Artem returned with Hans and Roger and the bottle of wine, Miles registered the coincidence that it was the same wine that Francois had displayed such knowledge of when he had first met him at Rob and Georgina’s wedding all those years before. Miles enjoyed being able to compliment his host on his fine selection of wine and then dazzle him with his knowledge of the vineyard and vintage.
‘Thanks Artem,’ said Miles as the car that would take him back to Zurich idled in the circular driveway. ‘It’s been good to meet you all. Thanks for your hospitality. Speak soon.’
‘Definitely, Miles.’
Miles climbed into the car and nodded to Artem and also Roger and Hans who stood in the front doorway. As the car made its way through the electric gates and onto the dark hillside road, Miles settled back in his seat and felt a tremble pass through his body. He felt the need to speak to someone, tell someone his news. In days gone by, he would have called Al or Fergal. That was no longer possible. He slid his cell phone out of the top pocket of his jacket and scrolled through his contacts. He hadn’t spoken to Lyudmila in a couple of weeks, their on-again off-again relationship going through one of its off periods. She was in the states doing some modelling and increasing her involvement with a charitable foundation that her father was involved with. She wasn’t the ideal touchstone for his news but he felt as though he needed someone. It wasn’t loneliness but he felt the need to connect. He pressed the call button. It was mid-afternoon in New York; she would probably be working. He could leave a message on her voicemail. But the ring tone had only sounded a couple of times when she answered.
‘Hi Lyudmila, it’s me.’
‘Miles!’ She sounded surprised, pleased to hear from him which bolstered his resolve to tell her what he intended to do.
‘How’s it going?’
‘Oh it’s crazy but nothing I can’t cope with. Where are you?’
‘I’m in Zurich.’
‘Business I presume.’
‘Yeah, I’m thinking of moving out here. An opportunity has come up
and I thought it might give us a chance to spend some more time together. What do you think?’
‘I think I’d like that very much.’
The whole conversation felt wrong and Miles wished that he hadn’t made the call. He and Lyudmila had no long term future. They both knew it; both were biding their time until someone else came along. She asked about the position; where would he be based exactly? Miles went through the conversational motions and got off the line as fast as he could.
He was lucky that the Widder Hotel had a room for him; he hadn’t phoned ahead and booked one because until Artem had invited him for drinks at his house he was intending to go back to London. Only that morning he had thought about the Widder Hotel with a mixture of nostalgia and regret on account of its connections with Al. The experience of meeting his future colleagues at Aden Partners and hearing what they wanted to offer him had served to exorcise those feelings. Changing quickly in his room and going down to the bar – one of his favourite bars – made him feel excited about the evening ahead, the life ahead. If this was going to be his new home, he would need to find his way around. After a glass of whisky – Balvenie – Al’s favourite, he set off into the night.
Sometimes, when Miles was away from home on business and he wanted to relax, he would find the most exclusive escort service in town and spend the evening with one of their girls. Sometimes he would sleep with her and sometimes he wouldn’t. It depended on his mood. Tonight, however, there was no way that he was paying for sex. If he couldn’t do what needed to be done through his own charm and psychology then he slept alone. As with making deals, Miles treated the process of locating a woman for casual sex as an intellectual puzzle. It had also become something of a pastime in the past couple of years. And he was pleased to see that he was getting better at it too. He was learning. Sometimes you had to sacrifice looks for moral ambivalence. The key to success was ruthless discernment and swift psychological evaluation. There were plenty of women out there who were only too happy to chat to him in a bar or a club. That was the least of his concerns. What mattered was finding the woman who wanted to take a risk, the woman who found it exciting to go back to a hotel room with a man she had only met a few hours previously. What he wasn’t doing was trying to find a long term partner. He was finding a short-term sexual partner. Nothing more. Sometimes he succeeded; sometimes he didn’t. In Zurich that night, he did succeed. He had thought he would. He would have put money on it. Her name was Anita. She was a couple of years older than him. Middle management. Someone had been leaving her office. She had gone out with her co-workers and many cocktails had been drunk. She didn’t normally behave like that, she was keen to make him know. The sex was perfunctory but energetic. Miles made sure that she came first, made sure there were no distractions when he came, nothing to interrupt his thoughts of Artem Babich and the hundred million dollars a year.
24 Long Haul
Dow Jones Index: 7915
USD/CHF: 1.348
3mth EUR/USD ATM vol: 10.4
Her name was Melody Eales, a larger-than-life Australian known around the London offices of Hartmann Milner as Jellied. But this was never said to her face. Even if she hadn’t been due to accompany him on the trip, Al would still have been reluctant to go. Krystina was always tetchy when he went away on business but she was worse than ever now as his trip coincided with her ovulation and they had been trying for a baby for the past year without success. But the fact that he was travelling with Melody doubled his trepidation. She had increased the level of her flirtatiousness, had told Al on more than one occasion that she was looking forward to their ‘little trip to Singapore’ – as she called it. What he found so difficult about his relationship with Melody was that due to movement within the internal structure of Hartmann Milner, she was now, in effect, his boss. Richard Mainstaff, the former head of all sales, had retired under what were rumoured to be dubious circumstances in which Melody had supposedly been involved in some way. With Vittorio having left to join a small Swiss Private Bank called Banca di Scuol, Al had been promoted to run the leveraged sales team, reporting directly to Melody. They had been working together for a couple of months now and this would be their first business trip together, a seventy-two hour extravaganza of meetings and entertainment. They were starting their trip in Singapore before heading home via Hong Kong, a place Al found difficult to travel to on account of the memories of Fergal that it always stirred up in him.
When he hugged Krystina at the door of their Chelsea apartment, she was silent save for one single melodramatic sob. Her emotion made him feel all the more wretched.
‘I’ll be back on Thursday morning.’
She caressed his cheek, her eyes glassy with tears.
‘I love you,’ said Al.
She nodded, went to speak and then thought better of it. Her lips were too tightly pursed as she swallowed down her emotions to form the words correctly. Al kissed her on the lips and turned to go, eager to get this whole episode out of the way as quickly and painlessly as possible.
In the back of the Mercedes on the way to the airport, his stomach felt empty and hollow. Melody made him nervous in so many ways. That s
he found him attractive was clear – Al had been around long enough to read the signs. But she was never coarse or overly suggestive. She was much too clever for that. She liked to have an audience and there was no denying that she could be amusing and easily match any of the men on the trading floor for banter, filthy or otherwise. When she made a comment to Al about him looking particularly handsome, she said it as though it were a handicap, as though he was a bimbo, as though any looks that he might possess would hold him back in some way. The first couple of times that she drew attention to him in this way, he had laughed and played along, but now it was really bugging him and he knew that he couldn’t hide it. What made things worse was that Melody had twigged that it annoyed him and rather than refraining from it – as he might have hoped and expected – she did it all the more.
‘Al darling, come on in,’ she had said to him the day before when he had joined her and Pierre Dupuis for a meeting in her office. Al was increasingly fed up with her use of the word darling. He shot her a filthy look. Later in the meeting when he looked at her, her expression had changed. Gone was the playful flirtatiousness and Al felt suckered into smiling as she smiled back – with affection.
When he found her seated in the first class lounge at Heathrow flicking through Hello, his spirits lifted a little. She was charming. Gone was any suggestive behaviour and as they chatted together about what they had got up to at the weekend – Melody had been to a health spa for a girls weekend with some old friends from back home and Al had had a lazy weekend with Krystina taking in the Lord of the Rings: Return of the King at the cinema – he began to relax. By the time they boarded the plane and made their way to their seats, the mood was positively amicable. As always, the reception in first was flawless. The purser showed ‘Mr Denham and Ms Eales’ to their seats – if they could be describe as such. These were more like pods with every comfort catered for. Luggage and jackets were discreetly stoved and champagne was served immediately. Al nestled himself into seat 2a and looking across the aisle to the occupant of seat 2c, he said to Melody, ‘Would you care to join me for dinner?’
Shadow Banking Page 30
