Peter Middleton

Will the real Peter Middleton please stand up. Is he the hero who gave Lloyd’s of London a new lease of life? Is he the fanatical Chelsea supporter who briefly played power broker in the struggle for management control of the football club? Is he the former monk and motorcycle enthusiast who might have had a supporting role in Easy Rider? Is he the hard-nosed London head of a US investment bank that fell on hard times but is now back in rude health? Is he the chairman of BZW?

“No. He’s the one that pulls all that lovely crumpet,” says a City bond trader who makes no attempt to disguise his envy. What was he talking about? Was he being serious? How many sides to Peter Middleton are there that we don’t know about?

Monk on a motor-bike

Some of the Middleton myth has faded with the passage of time. It is more than 30 years since he was a monk. The high-powered motor-bikes have been put on the blocks following an accident. He is no longer a kingmaker at Chelsea: he resigned earlier this month after what appears to have been a major disagreement with feisty controlling shareholder Ken Bates who owns a 25% shareholding but speaks for another 39% held by Rysaffe, a privately owned Hong Kong-based trust company. Middleton had wanted to appoint a new executive director following the death in a helicopter crash of his close friend Matthew Harding, who was also one of the club’s largest shareholders. When Bates refused, Middleton resigned. But he can count himself a lucky man ­ he had been offered a seat in Harding’s helicopter the day it crashed.

With so many interests ­ the boardroom tussle at Chelsea was certainly time-consuming ­ how does Middleton find time for the demanding role of chairman of Salomon Brothers in Europe? By all accounts he is a workaholic who involves himself in every aspect of the firm’s business and is certainly not a distant figurehead. However, he seems to have been an unusual choice for Salomon, principally because he had no real investment banking experience. He had also never been a trader, the usual career path for the bank’s most senior executives.

The nearest Middleton came to investment banking was a five-year stint with Midland Bank where he is credited with turning around the ailing Thomas Cook travel agency and traveller’s cheque subsidiary. However, Midland and Salomon Brothers are chalk and cheese and even his successful time at Lloyd’s was not seen as the ideal platform for a move into US investment banking.

But Middleton seems to have taken readily to the rough and tumble of Salomon. And he seems to have been a good luck charm to the firm. He arrived in November 1995. Since then Salomon has reported substantial profits every quarter ­ a notable achievement for one of the most volatile securities houses in the industry. Even Salomon’s share price has risen from a low of $41 to $46.25. He is also winning acclaim as a manager, although as one former employee told me: “You have to remember that managers at Salomon don’t command a high premium ­ the only people who really count are the producers.”

What about Middleton’s legendary reputation as a lady-killer? Married for 30 years to his childhood sweetheart and with three grown-up children, he then became a gossip-column favourite after a series of romances with three women young enough to be his daughters. Last month he married a 31-year-old Asian nurse from Wolverhampton.

Some outsiders have been surprised by his success as he does not immediately come across as a rival to Pierce Brosnan ­ or even the perma-tanned George Hamilton, who is about his age. His suits are noticeably square-cut and his hair-line is low, or is it the spectacles that are too high? At a drinks party given to celebrate Charlie McVeigh’s 25 years at Salomon Brothers (worthy of a medal or maybe two) he struck guests as being very intense, a view reinforced when he made a short speech about Salomon’s earnings rather than Charlie’s many achievements.

Will we ever know the real Peter Middleton? Perhaps not, but does it really matter? At Salomon and in the City he’s already becoming part of folklore because of his private life. Now that he is remarried and settled, how much would Salomon’s macho traders pay for his little black address book?

Andrew Pisker

Former managing director and head of global syndication, Lehman Brothers

“Lehman must have been off its trolley to let him walk away”. This was the immediate response of a senior US investment banker when he heard that Andrew Pisker was leaving the firm after 15 years. Pisker quit on November 6 without any immediate plans to join another Euromarket house.

What’s so special about Pisker that attracted a wave of publicity? Is it that he was an internationally ranked tennis star? Is it perhaps his stunning second wife, Belinda, or his reputed collection of Ferraris? Is it because the rumours that he had been asked to run BZW’s international bond operation before Bob Diamond have never quite gone away?

Certainly Pisker has a lot going for him. Despite 15 years with Lehman, he’s just 37. He was the only European head of a global division at Lehman and the only European on the fixed-income management committee. Those achievements stand out in a firm dominated by Americans in New York who are said to regard their international operations as side-shows.

Over 15 years Pisker had seen the best and the worst of Lehman. The best times were when he arrived in the early 1980s and the last two years when Lehman went public and had to prove to highly sceptical investors that it could stand on its own. In between there was a decade of the dark ages highlighted by outright personal greed, internal jealousies, gross senior management incompetence and life under fourth-division Shearson and then under ponderous, blinkered American Express.

So why quit when Lehman has finally begun to clean up its mess? Was there more than just a difference of opinion about the future direction of the firm? Did Pisker seek greater recognition for Lehman’s international operations ­ after all, far superior firms such as Morgan Stanley and Goldman Sachs generate more than half their revenues from international operations and growth prospects for many businesses are better overseas than in North America. Did he choose to stand up to Richard Fuld, the firm’s socially stilted chairman and CEO, whose rise to the top was principally a consequence of the departure of others?

Although a toe-to-toe confrontation with Fuld never took place ­ Pisker’s main conversations were with London chief executive Bruce Lakefield ­ Pisker may have expected to be given greater responsibility for running Lehman’s international fixed-income business. Although not a publicity seeker, Pisker was Lehman’s Mr Euromarket ­ not just because he’d been with the firm so long, but also because of his success in establishing Lehman Brothers as a serious international new-issue house. With the help of Jonathan Hakim’s European origination team and close cooperation with the firm’s US domestic bond group, Pisker had pushed Lehman into eighth place in the international new-issue league tables this year. That’s above UBS, Salomon Brothers, Nomura and ABN-Amro. Lehman was also beginning to close on seventh-placed Credit Suisse First Boston, once the undisputed Euromarkets leader. Although houses such as BZW, HSBC and ABN-Amro were still seeking to win global mandates, Lehman was already writing big-ticket global issues for the World Bank, Tennessee Valley Authority, Korea Development Bank, Exim Bank and the main US government agencies.

Not one of us

No-one at Lehman denies Pisker’s achievements and he is being paid his full 1996 bonus. But did the all-American Lehman leaders consider that he was no longer “one of us” after he had been approached early in the year by BZW to take on the job now held by Bob Diamond? Pisker denied the rumours to outsiders at the time, as did BZW. However, the denials were at best a smoke screen, at worst a lie. Pisker was offered the headship of BZW’s entire fixed-income business. He was to begin as deputy chief executive and then move up when Sam Marrone, the ineffective CEO, was relocated within the Barclays Group. Marrone has since quit to join ABN-Amro in New York.

If Pisker did irretrievably fall out with New York, Lehman’s executive committee there must be seen as very short-sighted. Pisker was a pillar of the organization in Europe, an example to prospective employees who were told by competitors that “Lehman will never be a true bulge-bracket firm”. He is still an unrepentant admirer of his old firm but outsiders believe he was let down by Lehman’s management. They say that London resident CEO Bruce Lakefield, a former US Navy nuclear submarine commander, should have put handcuffs on Pisker. One commented: “I can only hope that Lakefield’s captaincy of Lehman in Europe doesn’t follow the film sequence of Grey Lady Down.” As for Andrew Pisker, like as not he’ll soon be commanding his own ship.

John Sanderson

Managing director, Legg, Mason Limited

What do you do after 32 years in the City of London as one of the most highy regarded US equity salesman? Hang up the golden pen reserved for taking those really large block orders? Count your country houses or calculate how many extra days’ shooting would be required to make pheasants into an endangered species? Perhaps take a small tour to the remaining six or seven restaurants with a Michelin star you have not already visited?

John Sanderson, 51, turned down all these options, though he may have been sorely tempted. Instead he elected to open an office in London for Baltimore-based US stockbroker Legg, Mason. The Baltimore area is dominated by two brokers, Alex Brown and Legg, Mason, between which there’s a fierce but generally amicable rivalry. Legg, Mason, though, is a relative upstart since Legg & Co was only founded in 1899. By contrast, Alexander Brown & Sons was, according to Vincent Carosso’s Investment Banking in America, established in 1800 as a linen merchant which “carried on both financial and mercantile operations simultaneously in the manner of European houses.” Legg, Mason was formed in the early 1960s when Raymond (Chip) Mason, the current chairman and CEO, took effective control. Today the Mason interests own around 35% of the publicly quoted firm, with the next largest shareholder, Alliance Capital, owning 11%.

Sanderson’s move to join Legg, Mason came as a surprise to many of his friends because he had spent the previous 28 years with Kidder, Peabody. “John was part of Kidder’s very high quality London sales team which included the unmistakeable figure of David Thomson (only five foot six inches but usually weighing about 400 lbs), Peter Forster and the office manager, Jason Bacon,” says a former Cazenove partner.

Who can remember the City back in 1963? That was the year when Sanderson arrived to work as a blue-button (a glorified gofer on the floor of the Stock Exchange) for Lumsden & Co, which eventually became part of Henry Cooke, Lumsden & Co. In those days a pound bought eight pints of beer or seven packets of premium-quality cigarettes. The standard three-shilling luncheon voucher could actually buy a basic pub lunch. The only skyscrapers in the City were Lee House and Moor House in London Wall. In those days ­ it seems almost unbelievable in 1996 ­ London Wall was considered to be on the “outskirts” of the City. All the action was close to the Bank of England and the Stock Exchange. A good address was “within five minutes’ walk of the Bank”.

Nickels and dimes

After training at Philip Hill, Erlanger, Sanderson joined Kidder, Peabody as a salesman in 1967. Kidder had an excellent reputation in London and could claim a close working relationship with Barings that went back to the 19th century. Kidder was also very close to Cazenove, the premier “Establishment” London house and a major underwriter. Sanderson thrived at Kidder ­ he became a partner in 1979 and by 1988 had taken over Jason Bacon’s position as manager of the equity sales group. But Kidder’s reputation had plummeted after the 1986 acquisition by General Electric and by the 1990s there was a rotten core in its mortgage-backed trading business. When trader Joe Jett’s scam hit the headlines in March 1994, GE pulled the plug. By the end of that year Kidder had been sold for little more than nickels and dimes to PaineWebber.

Sanderson, with his old colleague Peter Forster, is relishing his new challenge at Legg, Mason which is not just a traditional brokerage house but also a major fund manager with more than $40 billion of total assets. There were the usual problems and delays in obtaining licences to open the London office but Sanderson says that business has been “up to expectations for our first full year”. Old friends at the main UK institutions have generally been very supportive and the Legg, Mason name has been a valuable asset and calling-card. Sanderson’s one regret is that “many UK fund managers simply missed most of the 2,000 points on the Dow.” Is it simply a coincidence that the London offices of Legg, Mason are in Founders Court, Lothbury, almost exactly halfway between the Bank of England and Cazenove. “It may have been at the back of our minds but would our clients really want us to be located in Canary Wharf?” comments Sanderson. How true.