Only Holey Buckett can roll into my office with the notion that a Swiss bank is in play, and even Holey only after lunch, and as to the notion that he and I can pick it up and play with it, well, it just goes to show how salesmanlike Holey can be, but how I wish he saves this for the customers. He plunks these certificates down on my desk, with a design on them featuring cuckoos and gnomes and gothic lettering which makes me figure it is German, then he waits for me to look impressed, this (he says) is the stock of the Union Bank of Switzerland, my friend Martin collects it, and if we help him fill his hand he remembers who his friends are.
Sure, he is welcome to bet on his chances but if he hopes to scoop up UBS he must have a better chance of scooping up the Matterhorn, I figure if anyone attempts this Switzerland declares war, with the top UBS guys in command of the army, for them the bank is just a day job.
Never mind, Holey says, this is just a civil war or maybe an inter-cantonal conflict, Martin is Swiss and runs an investment fund there, he skirmishes with UBS for years, all about special votes for Swiss citizens and the status of the bearer stock, but now he figures he can see the winning-post, old Senn is standing down as chairman and Robert Studer prepares to step up, but Martin can think of a far better chairman, meaning him.
Then Holey begins to tell me how compared with Citi or Barclays or whatever UBS underperforms, I figure the fact is it underreports, like they teach us in banking college, to analyze a Swiss corporation do not waste time on the published accounts, these are apt to be kinda conservative, just look at the price and assume the market gets it right.
Even so, there must be gold in them thar hills, and also in the vaults, not to mention some strategic holdings that are in UBS's books at their historic costs, from 1931, like maybe a few reinsurance companies and private banks, and if we can get our hands on some of these and make a turn, it helps us pay the rent in Moorgate.
Besides, I figure if there is one place where our bank needs a beachhead it is Switzerland, the only triple-A country in Europe and maybe the world and the big winner from the European single currency, on account the Swiss guarantee not to join it, already the funk money comes pouring in from Germany, the Swiss banks must think it is just like the old days.
I tell Holey we must not let the guys at UBS think our bank is trying to undermine them, or not until it happens, otherwise they cross us off their Christmas card list and other lists we need to be on, if we hold all this stock surely we have to declare it, I seem to recall there are rules about this.
So there are, Holey says, so here is what we do to keep them, Hillboot Intergalactic quietly extends its market making operations to include UBS, then we can take the stock onto our back book and no-one has to know about it, or not until it suits us to come out and swing a deal, this is known as the Swiss Bank gambit, it takes one to know one, says Holey.
Well, we rig up an extension to the warehouse and take some of Martin's stock on board, under plain cover, and I book myself into the Baur au Lac for a late skiing holiday which just happens to coincide with UBS's meeting, but what do I find when I get there but a message to call Rainer Gut at Credit Suisse, Herbie, he says, they tell me you take an interest in UBS, maybe you and I need to talk turkey.
Mom, I know Rainer from the days before CSFB when his bank is still married to White Weld, and his market intelligence is always good, but all the same this shakes me, I face an instant choice between straight denial and playing it his way and decide to play it his way.
We fix up to meet on the steamer that does rundfahrts round the lake, where Rainer opens some of his hand to me: in strict confidence, he says, UBS is getting flustered, they figure Martin may have enough stock to take over, so old Senn comes pattering along to me in secret, saying howsabout a nice friendly merger, which sets up a giant Swiss bank to tower over the Swiss Bank and dominate the world?
Naturally I stall him, Rainer says, on account if word gets out how UBS prepares to trade its independence, then it is put into play, and stays there, no way ever gets found to push that toothpaste back into the tube, as Warburg learns to its cost, so do not tell anyone, Rainer insists, and at this point his eyelid develops a twitch.
So I am sure he is as shocked as I am when this story is spread in full detail all over the blatts, UBS's stock price jumps and leaves the UBS guys struggling to engage reverse gear, this is all premature, they say, UBS is as sound as a cowbell and does not need to merge with anybody, or if it does, it can join up with the Swiss Bank and tower over Credit Suisse, and on this the price jumps again, and our rent is covered for another week.
After this all is set for the grand climax at UBS's meeting, the contested election for chairman, with the board backing Robert while Martin proposes himself, in a crammed hall he makes his pitch, he wraps himself up in the national flag and proclaims it is in the highest traditions of Swiss banking for this bank to make even more money, and its stockholders to be even richer, and he is the guy they need, vote early, vote often.
Mom, I do say he sounds confident, right up to the moment the poll is delivered, tho' not afterwards, Robert romps home, he benefits from a late swing in the vote and guess who swings it his way, Hillboot Intergalactic Nominees.
Martin is kinda vexed with us, but we figure we are better off for now with Robert remembering he owes us one, we just hold the stock on the back book and wait for the bid to come along, much love from
Your playful son
Herbie is arbitraging on behalf of Christopher Fildes
Herbie is arbitraging on behalf of Christopher Fildes
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