Upgrade and outreach

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Last National Bank of Boot Hill,
Moorgate, London EC2


Sometimes I figure we put Holey Buckett in the wrong job, he oughta quit Hillboot Intergalactic and run the World Bank, I tell him he must review his cost base, and what happens, just like good old Jim, he comes up with proposals for making it costlier.

All these investment bankers think big, with Jim it is head offices and mission statements, but with Holey it is upgrading, and team-building too, or that is what his spiel says, investment in human capital, depreciation and renewal, critical mass, global outreach, Mom, you get the picture, he plans to fire everybody in the building and hire a new batch at three times the price.

He gets the idea from Barclays, which has this investment bank called bzw and throws a tenth birthday party for it, with fireworks and pageants and a corporate history to take away and read, but these are just diversions, to get the guys out of Ebbgate House while the mechanic greases the revolving door, which does not stop whirring ever since.

They spend $60 million just on paying guys to go away, which some of them will do for nothing, once they know that the alternative is being posted to Canary Wharf, this is in the script as part of the strategic upgrade, which one way and another costs enough money for Barclays to notice, in a year when they are booked to make billions they have to get by with a few dollars less.

Well, of course Holey notices too, and figures this must be the treatment for Intergalactic, and gives me more spiel about a changing market, with competition hot and margins thin and no prizes for the guys who finish second, and when I ask him what he thinks this does to our cost/income ratio, he just tells me: It is like they say at Barclays, not all costs are bad, not all income is good.

Mom, I like this line, and one of these days I try it on head office, but as between cost and income I have this prejudice that stays with me from banking college, and if margins are thin we do not make them thicker by firing and hiring, even if the guys we hire are refugees from bzw, I notice Holey does not propose to save money by firing himself, but short of that we are maybe in the wrong business.

My friend the bill broker says he knows the feeling, broking bills is a business that goes ex growth some time ago, I do not recall when I last see one outside a museum, and my friend's firm finally notices this and chooses to pull out before the money does, they offer him retraining as a repo trader but he figures this makes him sound as if he comes from Essex.

Instead he is working on a syndicated buyout, which takes his old banking hall and gives it a new life as a champagne and oyster bar, we do deals with Ashdowns and Corney & Barrow (he tells me) and cut out the middleman, I have a pink form with your name on it, Herbie, you cannot miss this opportunity, the margins are stupendous and we issue our own credit card.

So I put the Last National down for a tranche of the stock, and tell him I have a name for his bar, this must be the Shareholders Discount House, but he sets me thinking, we have Intergalactic eating capital and earning zilch and contending with bulge bracket firms like Morgan Stanley, when instead we can be in the credit card business, which grows exponentially, and the spreads are 2000 basis points wider.

I pull out the file on Boothillcard, which we test market way back, I figure I am the last guy to carry one and maybe the first as well, it falls down on the support systems, which in those days are string and date stamps, but of course with today's systems you can train a card to fry an egg, or maybe print money, I tell Holey to put Project Upgrade on hold and instead let me have proposals for a full range of Intergalacticards.

Well, maybe Holey cannot keep it to himself or maybe the idea just gets around, but the next thing I get is a call from Morgan Stanley to ask how I like the new name, and does Morgan Stanley Dean Witter Discover just trip off my tongue, but when I ask who the Discovers are, some white shoe Wall Street dynasty, the guy says: No, these are the plastic Discovers, the fastest card in the west.

If Morgan Stanley figure they are in the wrong business maybe we all are, but it sure explains what happens when they last propose a grand strategic marriage, first they walk out with Warburg and then they walk out on them, and David Scholey never figures out why they leave him at the altar steps, he fails to come up with a Warburgcard.

You can see this new merger of theirs sets the whole market going. Every name is in the frame and the bigger the mismatch the better the story, investment bankers may not be too bright at making deals for their clients but when they come to sell themselves they get top dollar, like George and Rupert, or the Phoenix guys, who now do this twice.

I tell Holey we have to learn from examples like these, why take a hit below the waterline from firing the whole team at Intergalactic when we can sell them as a job lot, to Barclays, or Diners Club, or Fidelity or the Halifax Building Society, or some other guys who figure that the grass is greener and the margins fatter on the other side of the fence.

This frees up the capital we need to develop Intergalacticard, not to say several acres of prime office space all fully wired for sound, I see this as a joint venture with a retail chain, or maybe as the European end of Intergalacticardiscover.

But what I do not tell Holey is the merger Jim and I plan, goodbye World Bank, hail the Intergalactic Bank, with a credit card franchise in 80 countries, and global outreach and critical mass, if we can just economize on all his mission statements and head offices we make a fortune, much love from

Your outreaching son

Herbie's ideas get around to Christopher Fildes