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Sponsoring professional bicycle-racing teams has one clear advantage. Your name is not only on the bike riders’ jerseys, but you also buy the name of the team.
Financial institutions have joined the colourful pack of pedalling ads that was formerly dominated by manufacturers, retailers, charities and pressure groups. Most famous is Spanish bank Banesto – its team leader, Miguel Indurain, has won the three-week-long Tour de France (the most prestigious stage race) for five consecutive years and is the hot tip to do so again next month. Banesto claims his winning streak has drawn in more retail deposits, while the bank has milked the connection in its promotions. But not always successfully. A Spanish housewife who won “Big Mig’s” 1995 Tour bike in a Banesto prize draw didn’t know what to do with it. She complained it was blocking her hallway.
A pro bike team is a relatively cheap, high-profile publicity vehicle, particularly in western Europe. A team in the 22-strong first division (there are more than 60 pro squads in total) runs on, at most, $10 million a year. That guarantees your name exposure from February to October on public roads in half-a-dozen countries. On big one-day events and major stage races, such as the Tour de France, there’s also extensive TV and press coverage.
Other financials with teams include insurers – France’s GAN and the Netherlands’ TVM – and, since the beginning of the 1996 season, Rabobank, the Netherlands’ triple-A, number two bank. Troubled French bank Crédit Lyonnais takes a different approach. Each summer it casts aside gloom and sponsors the Tour de France’s overall classification. This not only means cash prizes for the riders – Ffr5.52 million ($1.06 million) in 1995. Each day attractive young women in CL uniforms support the race leader on the podium, presenting him with his CL-emblazoned yellow jersey, kisses and a large toy CL lion. Belgium’s Kredietbank takes a similar but more low-key role in the one-day Ronde van Vlaanderen.
Rabobank is putting money into revitalizing Dutch cycle racing, with the 2000 Olympics in mind. Like its sponsor, the team is solid (ranked number nine) but unexciting. In a 21-man squad, which includes 11 Dutch riders, its three stars – Russia’s Viatcheslav Ekimov, Denmark’s Rolf Sörensen and Belgium’s Johan Bruyneel – have all won Tour de France stages and one-day classics, but are unlikely to make an Indurain-style impact on the deposit base.
Roger Thomas
Cheeky exit at Chase
It was a little surprising when Chase and Chemical chose Marbella, second home of rich Saudis and fleeing British criminals, as the retreat for their more senior regional and product executives to get to know each other.
The first two days passed without incident, perhaps because the golf is good. An intense programme of strategic sessions and speeches went down well, with executives praising the worth of the exercise. The third day, Saturday May 4, was largely a rest day, ending with a dinner.
A number of staff admit to headaches and upset stomachs the day after this bash, but at least one executive is nursing more than a hangover. Charles Bauccio, Chase Investment Bank’s head of eastern Europe, Middle East and Africa, and a 27-year veteran of the bank, was allowed to resign shortly after the get-together owing to his eccentric and unexpectedly extended after-dinner speech.
According to Chase sources, instead of the 10 minutes of gentle banter planned, Bauccio launched into a lengthy and surreal anti-Chemical diatribe in which he ranted against his new employers, reserving particular venom for his new bosses, Don Layton and Arjun Mithrani. He then indulged his passion for local dress – his enthusiastic adoption of Uzbek national costume at the opening of Chase’s Tashkent office was noted in last month’s Euromoney– by dropping his trousers. This revealed the kind of skimpy undergarments more commonly seen on Marbella’s beachfront. They were bikini bottoms.
Simon Brady.
Wie bitte?
Hansgeorg Hofmann, Dresdner Bank board member, has brought globalspeak to Germany. He told the Frankfurter Allgemeine Zeitungin a recent interview.
“Wenn sich das Investmentbanking an einem Punkt in einem Zyklus befindet, an dem es nicht mehr so profitabel sein würde, dann muss die ursprüngliche Investition immer noch vor dem Hintergrund der zweifelsohne hohen Synergieeffekte für die künftige Positionierung unseres Hauses als Universalbank gesehen werden.”
Translation: “If investment banking finds itself at a point in a cycle where it is not so profitable, then the original investment must be seen against the background of the undoubted synergy effects for the future positioning of our house as a universal bank.” Alles klar.
David Shirreff
Music to forex traders’ ears
Frankfurt’s hotels were full during one week in May as visitors swarmed in for performances by Placido Domingo – and Manfred Kunert, global head of treasury at DG Bank.
Alongside his role of impresario at dealers’ jamboree Forex ’96, Kunert also wrote and staged the world’s first musical about the forex markets, performed on the final evening of the conference. “There have been musicals about love, war, even earthquakes, but never about our profession,” he explains.
Set on a forex desk somewhere in Europe, the musical takes a romantic view of how a small group of dealers decide on a whim to buy dollars (the Asian market was closed, and they have no ideas), and soon start losing. As the dollar plunges, the dealers remain upbeat, since “The first loss is the cheapest”. On his knees, the quiffed chief dealer croons, “What a mess, oh, what a shame/ But it is a must/ Staying in the trading game/ Until one goes bust.” Then the dealers decide: “Let’s call the central bank and fill up her reserves/ Then we can laugh again and show that we’ve got the nerve.”
Enter the central bank, dressed as Superman: “Oh, there she is, thank God, the central bank is in/ At last we get a chance to make this loss a win/ Let us be generous and fill her up like mad/ Now she’s the best friend that we dealers ever had.” Later, the gleeful central bank joins in the chorus as the US twin deficit turns into a surplus and obliges her to sell greenbacks.
According to Kunert, all this was a fair portrayal of life in the forex markets. “There’s no moral. I wrote the musical to remind people what a day on the markets can be like. It’s 70 per cent luck.”
Later, Kunert presented the Superman cape to Gerald Grisse, recently appointed head of forex at the Bundesbank. “I told the central bankers beforehand that they shouldn’t take it amiss, but in fact they were delighted. In an atmosphere like that, after so many drinks, you can do anything.”
Laura Covill
Riding the debt train
Malicious pranksters have been making life hell for East Japan Railway. Commuter services to Tokyo have been disrupted by a washing machine and a bicycle placed across the tracks, and bogus stink bombs let off in carriages, with passengers thinking they are being poisoned by a doomsday religious cult.
But the real railway terror lies in the unfinished “privatization” of the old Japanese National Railways (JNR), where a bankruptcy is approaching faster than a bullet train.
Under its charter, the JNR Settlement Corporation has only two years left to liquidate ¥27.58 trillion ($256 billion) in debt. In 1987 when the Japanese railway network was “privatized” and split into six regional passenger rail companies, one freight operator, and various smaller units, JNR Settlement took over two-thirds of the total JNR debt of ¥37.1 trillion ($345 billion).
Far from eradicating the debt through land and asset sales of ¥25.5 trillion – as intended – the JNR Settlement Corporation has allowed it to grow by ¥2 trillion.
Unless the private rail companies are to be crippled by assuming this colossal obligation, the government will have to wipe the slate clean by raising taxes, issuing bonds or, almost inevitably, by taking a hit that will cost each and every Japanese – even in Okinawa, where there are no railways – about ¥160,000 ($1,485).
The biggest fiasco is only about 10 minutes’ walk from the MOF castle: a 20-hectare expanse of gravel and mud on the east side of Shimbashi station in the centre of Tokyo. At the height of the 1980s “bubble”, JNR Settlement could have sold the land for ¥4 to ¥5 trillion. If it were sold now, the Shimbashi site would probably raise ¥500 billion to ¥600 billion. In the meantime, this diadem in the JNR debt crown has been used to host the musical Catsin a marquee, and has been excavated with the archaeological discovery of some 300-year-old wooden plumbing.
Meanwhile at JNR Settlement, its 2,000 employees, whose average age is 52, are wondering about the future. “The more success we have with the sale of JNR land, the sooner I’ll have to leave this job. I feel like an octopus that keeps nibbling away at its own tentacles to survive,” says one. Interest payments are ¥3.8 billion a day.
Peter McGill
A safe as big as the Ritz
If you’re overweight in Indian paper, Citibank has the solution. Its branch in Bombay is now perfectly placed to take the stuff off your hands.
Your problem probably began, like Citibank’s, in 1993 when the Indian government opened up the markets to international investors, but didn’t change the number of shares per certificate: this remains at either five, 10, 50 or 100. “We had a vault of 900 square feet,” says Rajiv Das, business manager of Citibank in Bombay, “but with volumes going through the roof, we were inundated with paper.”
Citi needed a new safe. Or rather, two new safes, with a combined area of 3,500 square feet. They needed to be cash-standard vaults, under internal and US regulations, conforming to specifications no Indian manufacturer could meet.
Enter the Acme Safe Company of New York.
The logistics of the operation were horrendous, according to Sid Stone, security consultant at Acme. The pillar-filled basement in which the larger vault was to go had “a thousand different dimensions”. The safe was constructed in 450 pieces of eight-inch (20cm) thick concrete, none of which could be altered in any way once shipping had started. All together they weigh 800,000lb (350,000kg). They were packed into 19 flat-rack containers – the bulk of a medium-sized ship – and shipped from the factory in Miami to Bombay. At Bombay, the Citibank site could cope only with one or two of these containers at a time, and Bombay traffic restrictions meant that they could be moved only at night. Furthermore, the basement where the vault was being installed needed extensive work.
The process took about four months.
Felix Salmon
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