The name’s Lynch, Merrill Lynch

Merrill Lynch’s Euromarket Christmas party in London this year had a James Bond flavour. Was Merrill trying to say it had been shaken by Deutsche Morgan Grenfell’s hiring spree this year, but not stirred from its position at the top of the league table? Or was it just giving its syndicate a licence to kill future defectors?

The ThunderBond party, though lacking Martinis, tried to evoke the ambience of the Bond milieu. Black ties were in evidence as was a casino, the British secret agent’s favourite way to woo women and humiliate his enemies.

It was a winning formula. London syndicate supremo, David Tory, said his group had worked hard to generate ideas to beat last year’s party. This was held in the Sega Centre, where guests played computer simulated head-to-head car races around a track in Daytona.

On this occasion cars ­ Aston Martins of course ­ had to be left at the door, along with overcoats, bugging devices and Walther PPKs. The Museum of the Moving Image was the venue. Scenes of Roger Moore and Barbara Bach cavorting around Egypt in The Spy Who Loved Me played on the screens.

A disappointment for true Bond-fans was that the expected phalanx of James Bond lookalikes was lacking. Only a version of arch-bad guy Jaws was present. Jaws, who in one classic scene destroyed a small Citroen van with his bare hands and his steel teeth, took a more low-key approach during the evening. The lookalike’s dentures were more often seen glinting by the bar, a beer bottle their victim.

The party stands out as a beacon of festive independence this year amidst a new trend to pool resources. Other top houses opted to form a group and hire the exclusive Oxo Tower on London’s south bank. The so-called ‘syndicated’ party included Morgan Stanley, SBC Warburg, CS First Boston and Salomon Brothers. All were co-leads, but the top line went to Goldman Sachs. which was the organizer.

On the night of the Merrill soiree news circulated of a fire at the Oxo Tower. It turned out to be a false alarm ­ the Oxo was closed for lunch but open for dinner.

But Bond is never happy to be upstaged. Perhaps he was up to his old game of sabotage and subversion? Steven Irvine

Talk to me like I’m just a kid

When the television cameras roved between the desks of UBS’s bond trading floor, the traders grumbled at the intrusion, then relaxed when they spotted that the alien accompanying Bob Harding, head of debt bonds management, was a little girl. Warrior poses melted as paternal instincts took over.

Seven-year-old Shafika had been invited by UBS to interrogate Harding for new UK television station Channel Five’s planned weekend programme The Mag. The interview will be shown in a regular 10 minute slot called ‘Unique Species’ which aims to explain complex phenomena ­ telephones, computers, rockets… and bond trading ­ to 8-14 year olds. It might also appeal to a more mature audience. Shafika pretends to be a visitor from outer space and asks those basic, first-principle questions that we’d like to ask, but now we’re too old to dare.

The programme will probably be shown next April, so it will be a few months before Harding’s nine- and 12-year-old children get the definitive answers to questions such as “Why does the dentist live in Belgium?” and “Who would want a zero-coupon bond?” Rupert Gordon-Walker

The X-files of the MoF revealed

As if Japan’s ministry of finance (MoF) didn’t have enough to worry about. A recent book ­ O-warai Okurasho himitsu joho (secret files of the ministry of finance) by television comedian Terry Itoh ­ pokes fun at its bureaucrats, and is a bestseller.

It consists of three interviews with (anonymous) MoF officials. Itoh gets them to talk openly about their motives for joining the ministry (power and money), their opinion of politicians (stupid and easy to manipulate), and their personal lives.

One bureaucrat boasts that a MoF official “can understand and deal with in 10 minutes a document that any other bureaucrat would spend two nights reading and still not grasp”. The three are also obsessed with the fact that the 20 graduates who join the MoF each year are so naturally brilliant that none ever had to study particularly hard to enter Tokyo University’s Law School (the alma mater of 95% of them). MoF officials are also, they brag, excellent sportsmen and find it easy to pick up women.

Fact or fiction? Anyone who has had dealings with the MoF may find it hard to tell. Garry Evans

Plucky Tuckey rises at Phoenix

Phoenix Securities, the British corporate finance boutique which specializes in advising its larger financial services brethren, has always been something of a refugee camp for executives fleeing the bureaucracy and politics of larger investment banks. Its founding partners came together in the early 1980s, after quitting their previous employers: John Craven and David Reid Scott from Merrill Lynch, Philip Seers from CSFB, and Martin Smith from Bankers Trust.

The firm’s latest recruit is a refugee of a different kind: Andrew Tuckey, former deputy chairman of the Baring Group which collapsed in February 1995. Following Baring’s rescue by ING, Tuckey immediately resigned but the bank’s new Dutch owners asked him to stay on for a year to smooth the transition. With that assignment complete, one or two potential employers sounded him out, but there was little prospect for Tuckey to return to a senior position at a large investment bank.

So why did Phoenix employ him as a consultant? What financial services client of Phoenix would hunger for advice from the man who ran a bank which collapsed in such spectacular fashion? Tuckey will not advise other banks ­ the Phoenix partners feel they have that sector well-covered. Their longest running problem has been how to reduce their dependence on M&A deals in just that sector. They will use Tuckey’s contacts and broad corporate finance experience to diversify.

His style certainly fits the firm’s culture of old school tie and discreet charm. But is Tuckey damaged goods? He was far removed from the Singapore trading operations which caused Baring’s collapse and has not been singled out for blame by either of the key UK regulators investigating the affair: the Bank of England and the Securities and Futures Authority (SFA). He did agree with the SFA in March not to take a senior management position within an SFA-regulated firm in the foreseeable future. Though he is only a consultant at Phoenix and has several other outside directorships and trusteeships, he will be working for the firm almost full time. Peter Lee

Birgit Breuel’s Christmas present

Alumni of the east German privatization agency the Treuhandanstalt can relive those early days of re-unification by playing a deeply corrupt board game launched last month ­ the Streuhandspiel. For one Streuhandthaler they can buy one of a selection of crumbling, pollution-ridden east German companies, overmanned and loaded with old debt: among them are Vesuv Werft AG, Mismut and Ego Blech. The trick is to con the Streuhand into giving you more money, lie about the number of jobs you will preserve, then renegotiate the contract terms until you come out ahead, even though the firm goes bust and the workforce is laid off. Bribery, extortion, blackmail, and threatening the other players with having to pay your debts if you go bankrupt, are positively encouraged. So is the judicious use of old Stasi documents. The Streuhand can choose between prosecution, reclaiming the property, or letting you continue. It usually opts for the latter.

All this is horribly familiar to Treuhand veterans. Scandals about how the agency was conned of billions of Deutschmarks between 1990 and 1995 continue to hit the press. The Treuhand’s successor, the BvS, hasn’t escaped scandal either. The game’s inventor, Guido Bombitzki, a 36-year-old Berlin lawyer who worked a year at the Treuhand, says he has no axe to grind: “I left on good terms,” he says. Although his day job is commercial law, Bombitzki has thoughts of launching another game in a couple of years “with an ethical slant, maybe the trade in human organs”. The Streuhandspiel, in a limited edition of 700, was made in Poland and costs Dm120.

An ideal Christmas present for former Treuhand president Birgit Breuel or any of her erstwhile staff. David Shirreff

Whose ears are burning?

European governments in the shadow of Emu are getting especially tetchy about each other’s sloppy financial management.

Bundesbank director, Edgar Meister pulled no punches in a speech in November on the dangers of derivatives. “In one European country,” he said, “we recently saw the sheer scale of derivative losses that market movements can cause.” Meister mentioned that “active” management by the treasury of this country, using currency swaps, mostly from underlying Deutschmark and Swiss franc bond issues into “weaker currencies” between November 1989 and April 1992, had built up book losses, which were then somewhat increased by currency options put on in an attempt to mitigate the positions.

“According to the latest information,” said Meister, “the book losses on these contracts amount to around Dm1.5 billion ($1 billion), and the potential losses on contracts maturing between 1998 and 2002 are several billion Deutschmarks.”

Meister didn’t identify the country, but most of his audience at the Technische Hochschule in Darmstadt, knew very well it was Belgium.

“Ladies and gentlemen,” he continued, “losses on this scale are hardly a thimbleful, even for a state budget, and they put a burden on the entire economy and the individual taxpayer. The prudent and conservative use of these instruments ­ which I assume should go without saying ­ was not sufficient in this case.”

Kingdom of Belgium treasury officials are unchastened. “The report seems to be exaggerated,” says one. “We reported some unrealized losses on some very specific derivatives transactions. If we unwound them today the loss would be Bf32 billion ($1 billion) ­ that would increase the cost of our debt by one to two basis points. But we’ve reported this regularly and we answered questions in parliament in October. It was mainly convergence trades in currency swaps. And we sold currency options, including options on the dollar.” The official wouldn’t mention specific trades, “but we do publish the composition of our debt after swaps”, he said. He pointed to the substantial movements seen in currency swaps. The maximum loss of Bf32 billion could improve before 2002 when the last trades unwind. There was no admission of imprudence, he said but, because the context has changed since 1992 and 1993, “we have stopped buying and selling options”. David Shirreff