View our latest Private Banking Survey results

Safra's private war with Amexco

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: SContreras@Euromoney.com

By:
Published on:

Private banking is a business that more and more banks want to be in. It looks easy; go to Geneva and buy one of the banks already operating there. American Express did that, and had the foresight to ensure that the old owner, Edmond Safra, would not compete directly for five years. The five years are up next month, and Safra has a score to settle.

safra cover 680px

By Richard Evans and Neil Osborn

Here are a couple of snide little stories about Edmond Safra — the kind that are giggled over in some quarters of American Express. Dear American Express, enjoy them while you can, because this is the year Safra returns for revenge, the year Safra means to beat the living daylights out of you.

Snide little story one: An American executive was plodding through Paris airport when he spotted Safra and his wife. The immensely wealthy couple were waiting patiently at the end of a long queue at the VAT refund counter. "A billionaire scrabbling up a few pennies," the executive observed with scorn.

Snide little story two: Some time after American Express bought Safra's Geneva-based Trade Development Bank in 1983, the Lebanese banker was invited to fly from Geneva to New York for a meeting in an American Express jet. The fleet at that time included a Gulfstream II and a slightly more modern Gulfstream III. When he heard that Gulfstream II was scheduled to pick him up, Safra lost his cool. "He thought he had been insulted and screamed for the Gulfstrearn III," reported one source, adding: "He comes across like the chief villain in a James Bond movie."

These tales may paint a totally inaccurate picture. On the other side there are dozens of senior financial figures who testify that Safra, 56, is an admirable man — hard-working, shy, calm, generous, and, in a gruff way, charming. But Safra must know what's said behind his back in some American Express circles. Whatever else this legendary Jewish banker may be, he is intelligent and well informed. And the sneers will increase Safra's determination to win big in his forthcoming showdown with American Express. "It is very much a matter of pride that he succeeds," said a close friend.

The celebrated feud between Safra and Amexco will reach its height at the end of February. That marks the end of the non-compete agreement which Safra signed when Amexco bought TDB five years ago. On March 1 Safra hopes once again to offer his unique brand of banking services in Switzerland, under the banner of Republic National Bank of New York, control of which he retained in the 1983 deal. It's a day Amexco has dreaded.

Some bankers go so far as to believe the survival of TDB as an effective banking operation is at stake. When James Robinson III, Amexco's chairman, took over TDB, he was well aware of the iron hold Safra had on the bank — hence the non-compete agreement. Probably more than any other bank in the world, TDB was dominated by its owner. Many of the staff were old friends or relatives of Safra from his native Beirut. Many of the clients came to the bank on the strength and mystique of Safra's name.

James Robinson 680px

James Robinson III, Amexco chairman: during the 1983 honeymoon he was "pleased and gratifed" to be with Safra

The return of Safra to the world's most important private banking centre may therefore mean a great rallying to his flag. Losing too many clients and staff to Safra would leave TDB an empty shell and make Amexco a laughing stock. Not only would it make nonsense of Amexco's investment, it would punch a hole in the global private banking strategy of American Express Bank, formerly American Express International Banking Corporation.

TDB, which is part of AEB, but retains its identity, has about $6 billion in client deposits. AEB has another $6 billion or so from its global network of offices. "I don't think AEB would be a credible force in international private banking without TDB," said one New York banking analyst. The demise of AEB would be very sweet for Safra, who is said to believe he was very shabbily treated by Amexco.

But the forthcoming fisticuffs also have broader significance. Private banking is one of the few remaining growth areas in international finance. Dozens of major banks are trying to enter it. All their eyes will be on Safra to see if his simple brand of banking — giving customers a warm greeting and a highly conservative, under-lent bank into which they can deposit their money, but not much else — will succeed against the more elaborate style of Amexco, which offers clients money management services, credit cards and other bells and whistles.

Safra has not entirely cut off his relationship with Amexco; he and Robinson lunched together in December last year. Still, as one American Express source unkindly reflected, Robinson is professionally affable: "He would try to work out a common ground with Genghis Khan." There's no concealing the animosity , however. For the past four years there has been endless bickering and exchanging of legal letters.

"We have had certain disputes with people acting directly or indirectly for Safra, who, we believe, were trying to poach clients and staff in a manner which we did not think was fair and which, we consider, contravened our agreements," said Amos Bergner, president of general management at TDB, with studied understatement.

Will the real Edmond Safra please stand up?

safra head 160x220


Edmond Safra doesn't talk to the Press. (Indeed he avoids speaking publicly even to friendly groups; at an investor relations meeting for Republic National Bank, organised by Bear Stearns last year, the honorary chairman attended but let his lieutenants do the talking.) Euromoney therefore could not ask him about the hearsay below. Safra's friends and enemies paint two scarcely recognisable portraits of the man. Depending on who's talking, Safra is:

A good guy who is...

Wildly generous. During the flotation of his Trade Development Bank in 1974, a member of the Rothschild clan pulled him aside for a chat about a charitable cause. "How much did that cost you?" a banker asked afterwards. "Twenty million dollars," he replied.

Shy, religious and humble. As the son of a respected Beirut banker who was a leader of the Sephardic Jewish community there, "Safra grew up in an environment of extreme prosperity and great respect," said an associate. "He doesn't believe in being flashy. His cultural foundations wouldn't allow that. That's reflected in the way he walks and dresses and behaves." His favourite quotation comes from the Koran. "The biggest enemy of man is envy."

Upright and honourable. "Edmond is 100% clean," insisted one friend. "The Sephardic Jew is an extremely proud animal and Edrnond is no exception. It would be beneath him to cheat somebody. And he doesn't want to provoke God." He's also concerned with maintaining a respectable image for his bank, said another friend. He once roundly scolded his colleague Albert Benezra for lunching with the former prime minister of Rhodesia, Ian Smith.

Good to work for. Safra recruited many of his friends and relatives to work for TDB. One of his former employees said: "Practically everybody used the familiar tu rather than vous. We all knew each other as friends. We would fight hard in the bank and then afterwards play cards."

A detailed manager. "He worries," said a Bear Stearns banking analyst, Mark Alpert. "If Republic is off an eighth, hell cancel future plans and watch the stock price.

A bad guy who is...

Mean with his money. He personally supervised all expenses over when he owned TDB.

Scared of assassination. Safra is surrounded by bodyguards, it is said. "He has men with sub-machine guns at his Monte Carlo apartment," claimed one wild source. "Each of his network of residences has a silver cache in case of emergency." This may be nearer the truth. Safra once intimated to a friend he had personal stockpiles of gold, explaining: "I have to have something to start again with if the worse happens."

A cultivator of shadowy relationships. Safra's detractors like to mutter about his alleged relationships with unsavoury governments — although they can never quite pinpoint the governments or what they think Safra gets out of them. They point to a scrap of information from Irangate. Republic accounts were used for payments to the air leasing company that hired the plane Oliver North used to fly to Tehran. Republic uses the same leasing company. The bank said there was nothing suspicious about this.

Tough to work for. According to former TDB employees, no one was allowed to have a full picture ot what was happening in the bank except Safra. "Trade was not a school," said one of his former salesmen. "You never learned anything. You never had any responsibility. People working for him are secretaries of a high order."

A delegator. "In his TDB days he was surrounded by people that looked like Middle Eastern carpet baggers. He wasn't pushy — he let them be pushy," says one acquaintance.

These individuals acting for Safra are presumably the 40 or so people labouring in Geneva as this edition went to press to get Republic ready for opening. Some of them are "consultants" and "advisers", not employees.

But Jeffrey Keil, vice-chairman, Republic National Bank of New York, said there was no concealment about the preparations. "That's why I'm here in Geneva," he said. "We open on March 1." Irritatingly for Robinson, the great opening will take place in the building formerly occupied by TDB. In 1984 Safra negotiated an agreement allowing him to buy back the building where he first started TDB, on the Place du Lac, with a commanding view of Lake Geneva. TDB now is tucked away further down on the Rue du Rhone. "Amexco were very stupid. Somebody should have been sacked for making the decision," said Swiss banker. So, when Safra opens the doors of his new bank, it will be as if he had never been away. It's the kind of psychological advantage that could prove crucial.

Safra was apparently confident he would receive a banking licence for Republic to open a branch in Geneva by the end of 1987. But the Swiss Banking Commission had still not given its approval in mid-January 1988. "We are examining his application, but many conditions have to be satisfied," said Kurt Hiore, a director of the Swiss Banking Commission. "Granting the application is by no means automatic." It would be very nearly automatic, if Safra were a Swiss citizen, but he has Brazilian nationality.

Amexco is also well aware of the power and influence of the Swiss Banking Commission. "Switzerland is a very respectable place to do business. If it looks as if one bank would go after another bank's staff in any organised way it would not be tolerated by the Banking Commission. They would say that it prejudices a bank's promise to conduct its business in an orderly way," said Heinz Zimmer, vice-chairman of global private banking for AEB.

Yet Republic officials declared themselves confident the licence would come through quickly. Safra himself makes it a policy not to give interviews.

How quickly relationships go sour. Scan the financial pages of January 1983, and you'll see photographs of a smiling Safra, shaking hands with an equally satisfied Robinson. Robinson had just announced that he had agreed to pay $550 million for TDB plus its overseas branches. For Amexco, TDB was seen as a way to build up AEB quickly as an international private bank. For Safra, the deal allowed him to dispose of a bank which thought was dangerously exposed to LDC countries, without affecting his other operations. The sale of TDB did not include Trade Development's 61% stake in Republic New York Corporation, the holding company  of Republic National Bank of New York. Safra also became chairman and chief executive officer of AEB.

Safra sold because of his worries about TDB's Third World loans when Mexico hit the wall. Safra's friends tell the story as an illustration of the man's conservatism and high-minded sense of obligation towards others. He is, after all, the fifth generation of a family of bankers who financed the Empire's caravan trade from a base in Aleppo, in what is now Syria.

His grandfather moved to Beirut to found a bank that Safra still owns, despite the troubles of the city. In 1976 he had resolved to sell the Beirut unit for $6 million to Toronto Dominion, but changed his mind. Safra's reverence for his father Jacob, whose picture is displayed to this day in his office, was the deciding factor. "I told him: 'You have no right to sell your father's bank'," recalled a friend. "And he said: 'You're right. Tell the bastards I won't sell'."

When the Middle East grew uncomfortable after the foundation of lsrael, Edmond, the most promising of Jacob's children, was dispatched to explore less politically troubled regions. At 18, he was in Milan, trading gold and coins like his forefathers. (Safra means yellow in Arabic.) By 1955 he was in Brazil to found Banco Safra, now run by brother Joseph. Then in 1956 he established TDB, which, aside from private banking, specialised in gold trading, à forfait and the banknote business. Republic was incorporated in 1965.

Whatever the country of operation, Safra remains a Sephardic Jew. (Sephardic Jews remained in the Middle East and the Mediterranean countries for centuries, speaking archaic dialects of Spanish and Portuguese, while the Ashkenazi Jews lived in northern Europe, speaking a German dialect, Yiddish. Not much love is lost between the two groups.)

This heritage is the foundation of Safra's character. The Sephardim living in Arab countries adopted the Arab tradition of doing business without documents.

Asked why he had a $50 million line to a Saudi he had never met, Safra replied: "My father told me I could deal with that family without fear."

In the Lebanon the tradition included living easily side by side with Arabs. When Safra married his wife Lily, the guests included many Arab friends.

And it was part of the tradition to run extremely conservative banks, so that depositors could sleep easy. (The balance sheet of the Amman-based Arab Bank looks rather like the old TDB.) There was an ingrained horror of defaulting on depositors.

"What am I going to do?" Safra wailed to a colleague from Mexico. "If the people in Latin America default, I can't cover my liabilities. Can you imagine the day I can't return a deposit? If that day comes I would have to open this window and jump out. Otherwise, what could I do with my face?"

One idea was for Republic to buy TDB, which would bring TDB under the Fed's umbrella, giving it the lender of last resort it lacked. The Fed reacted coldly to feelers from Republic. And suddenly Robinson was feeding the press mellifluous quotes. "I am very pleased and gratified that an international banker of the stature and experience of Edmond Safra is willing to combine his foreign banking activities with AEB, and to assume the leadership in the creation of what will be one of the leading international financial institutions in the world."

Safra sounded equally love-struck. "I am most pleased with the transaction and with the opportunity to build the world-wide business of AEIBC. I am also delighted to be associated with Mr. Robinson and the Amex family," he said back in 1983.

A little more than one year later, in a public agony of second thoughts, Safra severed his relations with Amexco. "Safra and Amexco joining forces was never going to work. Water does not go well with fire," said one former TDB banker. "Amexco thought Safra would fertilise the bank. But Safra could not work with rigidly defined organisational and management charts."

Amexco said Safra was uncooperative. For instance, the company claimed, Safra did little to help the marketing of Amex cards to TDB customers. "Safra's relationship with Amexco was based on false assumptions," said another former TDB banker. "At TDB he was always the boss. He was never involved in Byzantine power struggles. He probably thought that, as the corporation's biggest shareholder, he could impose himself. But he did not have the power to fight with Robinson or the others over even small things, such as having a top floor office or car parking space." One source of irritation was credit committees and controls — not meat and drink to a man accustomed to lending on the phone.

Worse was Amexco's 1983 fourth-quarter loss because of its ailing insurance subsidiary, Fireman's Fund. Safra had sold TDB for $160 million in cash, $175 million in Swiss franc notes issued by an American Express affiliate, 2,692,300 Amexco common shares (each worth $61.38 in January 1983) and 1.7 million warrants to buy Amexco common stock at $55 a share, expiring in February 1987.

"A vendetta? I'd love to be in a position to answer that, but you'll really have to ask Mr Safra"
- Heinz Zimmer, AEB

After Amexco's loss, the company's stock fell by more than 50% as compared with the previous year. Safra was outraged, feeling Robinson had misled him. Robinson offered to sell TDB back to him. Safra left Amexco and negotiations began, but a price could not be agreed, and Safra subsequently sold all his stock. The market price was around $30 during January 1984. This would make his shares worth about $80 million. Assuming that Safra did not exercise his share warrants, the total cash he received for TDB was about $415 million instead of the $550 million agreed.

Publicly, both sides deny any grudge. "Is there a vendetta?" said Tom Robards, treasurer of Republic National Bank of New York. "Absolutely not. Not from our side." Zimmer of AEB was more elliptical. "A vendetta? I'd love to be in a position to answer that, but you'll really have to ask Mr Safra. I have no access to his thought processes. Safra will be nothing special when he opens a Republic Bank in Geneva. He will be a competitor, just as are many of the other banks in Switzerland."

And yet there are persistent rumours in Geneva that Amexco will either sell TDB, perhaps to Safra, or will sell AEB. "It's what I hear all the time," said one ex-TDB employee. "But I think it fits too neatly to be true."

At least one New York bank analyst could see a certain logic in the sale of AEB. "Looking at the kind of company Amexco is and the businesses it wants to be in, I don't think it's crucial that they have an international banking arm." Before the link with Safra and the drive after private banking, Amexco was considering the sale of AEIBC, then a rather ramshackle network of international offices trying to compete in international lending and merchant banking with the giants. AEB contributed 10.1% of Amexco's $1.7 billion pre-tax income (before corporate expenses) in 1986. Its return on equity, at 14.8%, was below the 20% achieved by Amexco as a whole. In 1987 AEB posted a net loss of $625 million because of loan loss reserves.

Keil of Republic was coy. "TDB was a superb bank," he said, but added: "We are not really looking for acquisitions at the moment." Bergner of TDB denied that any sale was being considered. So did Zimmer. "There is no question of AEB's commitment to TDB or to private banking as a whole. Private banking is the major strategic direction for AEB and TDB," said Bergner.

Certainly TDB has done well for American Express. AEB customer deposits and credit balances rose by 14.9% in the year ending December 31 1986. In 1987 private client holdings grew by 18%. This indicates AEB has managed to hang on to Safra's old clients and added some more, possibly from the Far East, where Amexco is good at scooping up deposits from the well-to-do. The bank need not fear a rapid decline in deposits, since Swiss private bank clients visit their money on average, about every 26 months, and seldom switch banks between visits. And since the private banking market is expanding, in theory both Republic and AEB could emerge winners.

Robert Smith 300px

Robert Smith, the current chairman of TDB

On the other hand, Safra is a frightening competitor. His work capacity is enormous. Some years ago, when he was applying for permission to buy a small bank, he was waiting for the beginning of a meeting at the New York State Banking Superintendent's office. The lawyers and functionaries in attendance began telling each other where they would rather be than in the meeting. "Safra said he would rather be on his yacht – reading loan files. Everybody believed him," said one witness.

While waiting for the non-compete agreement to expire, Safra has been building up his European network outside Switzerland. A new Guernsey unit has $600 million in deposits, while a Gibraltar bank opened last year has $300 million. And he has been cultivating his friends — thousands of wealthy friends in the US, Europe and Latin America, as well as in the Middle East.

More than 3,000 guests turned up for Republic's party at the National Gallery of Art in Washington during last year's IMF — a gathering that dwarfed the parties thrown by CSFB and Morgan Stanley. So great was the crush that 12 girls sat at the front door handling out badges, and even then queues formed. "This is Principal City," said one banker who attended. "These aren't intermediaries; they are people with money of their own."

In addition to the depositors, Safra has collected an important coterie of well-connected and experienced advisers. André George, former manager of the finance and treasury division at the European Investment Bank, is chairman of Republic in Luxembourg, another expanding outpost. Martin Mertz, former senior banking partner for Peat Marwick, now chairs Williamsburg Savings Bank in New York, recently acquired by Republic. The former Manufacturers Hanover president, Harry Taylor, sits on Republic's board. So does John Waage, former international chief of Manufacturers.

The relationship with Waage dates back to the 1960s, when Waage was in charge of Manufacturers' Middle East interests. This may help to explain why Safra chose Manufacturers Hanover to lead the international public offering of TDB's shares in 1972. The other lead was NM Rothschild. Safra has long been an admirer of Jacob Rothschild and, according to friends, keeps a photograph of Rothschild in his bedroom. Rothschild insisted that other Jewish houses be invited into the deal, although Safra feared some Ashkenazi firms would feel they had little in common with him as a Sephardic Jew and would refuse to underwrite. Whether for this or for some other reason, a number of the expected names were absent from the tombstone.

Endless phone conversations with his contacts, and his own finely honed market sense, have led Safra to some notable coups over the years, according to his friends.

He is credited with a decision to sell Republic's Mexico exposure at 95 cents on the dollar, twice what it would fetch today. He invested heavily in gold in the late 1970s and early 1980s, and also timed purchases well during the Bunker Hunt-induced silver boom.

"When prime was 20%, Edmond was buying Treasuries like crazy," said one associate. "What's he doing in the current market?" Euromoney asked. "Sitting on his hands."

Certainly Safra knows how to build a banks. He set up Republic National Bank of New York in 1965 with $11 million in capital. Republic New York Corporation is now the 28th largest bank holding company in the US, with 29 offices in the New York area and facilities in Europe, Hong Kong, the Cayman Islands, Tokyo and various locations in South America.

"It's now one of the strongest, if not the strongest bank in the US," said Mark Alpert, a bank analyst with Bear Stearns in New York. Excluding Brazil, non-performing assets are only $27 million, or 0.5% of loans. LDC exposure is only 2.4% of assets and a 46% reserve has been set up against losses.

Republic's equity-asset ratio is 6.1%, double that of some of the other big US banks. "Of the 35 banks which we follow," said Salomon Brothers banking analyst, Thomas Hanley, "Republic comes second only to Morgan Guaranty."

"Our clients don't need us to make them rich. At Republic we work for the peace of mind of our customers."
- Jeffrey Keil, Republic National Bank of New York

Republic follows the policy which Safra first used at TDB. The primary concern is to protect his clients' money, by avoiding risky investments and concentrating on products such as short-term fixed deposits. "Our clients don't need us to make them rich. At Republic we work for the peace of mind of our customers," said Keil. "The safety of our depositors' money is paramount. Everything is measured against that."

Republic has only $1 billion of funds under management, and a proportion of that is institutional money.

Safra has never been keen on the idea of discretionary asset management for his clients. "He never wants to see the day when a client can come to him and say that he lost money directly because of bad decisions by him or his staff," said one former TDB employee, who knew Safra well.

Loans are only 28% of Republic's assets. By keeping down costs, and attracting large deposits, Republic ensures a high level of productivity. As Alpert's analysis makes clear, this productivity allows Republic to achieve acceptable returns from lower yielding, higher quality assets, such as government securities. As treasurer Robards put it: "We want our clients to accept a lower rate of interest on deposits — ¼ to ⅜% below market — and pay higher fees for loans than they could at any other bank in town. What we offer in return is the ability to sleep at night."

Republic's depositors are foreign individuals in over 80 countries. "The typical depositor is either an entrepreneur or merchant who, having business risks, wants to protect his capital," said Alpert. "The average account size is around $400,000 to $500,000. This type of depositor will find the new Swiss branch very attractive."

Former employees talk of the family atmosphere at their bank. "I miss it a lot," said one. "They took very good care of you. " Safra sets the moral, ethical and professional tone of Republic, according to another former employee. The extent to which Safra personally identifies with Republic was illustrated by one New York bank analyst who closely follows the bank's stock.

"I was discussing Republic with a fellow analyst from another bank. He said he had recently met Safra to discuss Republic's future. Everything was fine until he suggested that there were one or two flaws in the bank's analysis and that perhaps a few of the numbers given to him should be checked. Safra got very angry and said how dare he suggest that he would run an organisation which was the primary interest of his professional and personal life, in any way that would be dishonourable. What he seemed to be saying was: I am Republic and Republic is me."

If Safra can build TDB and Republic out of thin air, then he can rebuild his Swiss empire. Aside from his staff, advisers and the old TDB building, he already has other building blocks in place. Republic is thought to have been spending $24 million a year on developing its European operation. A new advertising campaign, Euromoney understands, is in the making. It will emphasise the links between Safra and Republic. One slogan under consideration is: "Republic: a Safra bank." This will jog the memory of thousands of old clients wooed by the Safra magic over the years.

"There is a story I always remember about Safra greeting a client in New York, who was an old acquaintance from Beirut he had not seen for many years," said one former TDB employee. "The man met Safra to discuss his account in the afternoon. And at the end of the meeting Safra asked him to come back at 8 o'clock. The man was puzzled. He asked why. Safra replied — so that they could have dinner and talk about their younger days in Beirut when they used to get drunk. I'm not sure how interested Safra was in the conversation, or how much money the man had on deposit, but I have never seen a more satisfied customer."

Safra has had a Trojan horse in Geneva for years: Safra SA. It is the company responsible for managing Safra's personal fortune. It employs his own personal portfolio managers. In the same building is another company, Republic New York International Services SA. "This is the shadow bank," said one Swiss banker. "Over the past year it's been building up capital and hiring staff ready for D-day."

safra sign 300px

The Trojan horse: where Safra's own fortune
is handled by his practised portfolio managers 

Safra may also have been making approaches to his former chief lieutenant, Albert Benezra. Benezra first met Safra in Milan when he was working as a commodity trader. According to one former employee: "Benezra was closest to Safra and he needed that closeness for his personal security. It was very difficult for people who had to work with him. People who became too strong at Trade did not last. They were a threat to Benezra. Safra was the brains, Benezra the executor."

Given the extent of their friendship, it came as a great surprise to Amexco and Safra when Benezra sided with AEB in the buy-back negotiations. Since then Safra and Benezra are supposed to have been sworn enemies, although Safra and Benezra, accompanied by their wives, were spotted having dinner in Monte Carlo last August.

Asked about this, Benezra would only say: "That is erroneous." Benezra is now 65 and approaching retirement, but it would still be a coup for Safra if he tempted his old deputy back.

Whether Safra can tempt other employees is an open question. TDB has had losses: one former employee estimated that between 10-15 executives at manager level left the bank between 1984-1986. "They may not all have been from a very senior level, but they all had important client contacts," he said.

AEB was determined to keep as many of the remaining staff as possible. "Even if people were leaving to join other banks, AEB's senior managers were still convinced that somehow they would return to Safra," said one former TDB banker. "In order to persuade people to stay, some very high bonuses were handed out." A number of Safra's ex-employees were given blocks of Amexco stock worth up to $250,000. And Benezra was apparently pleased with his chauffeur-driven car, a privilege Safra did not grant him.

The money came as a welcome surprise to TDB executives. Safra was apparently less generous. "Edmond rewarded with titles and recognition, not cash; he always remembered that, as he was the owner of TDB, the cash would come from his pocket," said an ex-TDB banker.

Another added: "Safra did not pay well. But to the Jews he promised brotherhood and to others friendship. He made people accept that everything was for Trade and the moral satisfaction was for them."

Many of the present TDB employees are said to resent the fact that most of the key decisions are now taken by a small committee, attached to the office of the chairman, Robert Smith. There is also, apparently, frustration among the staff at the lack of initiative of their new New York managers.

"Amexco has not been very frank with its workforce," said one former TDB banker: "It was impossible to find a decision maker. Take Emile Saadia [a member of TDB's management board] for example. He had excellent contacts with China and could always refer directly to Safra. I remember when I was at the bank, Saadia proposed a swap operation with China. Nothing was done for two weeks, while under Safra a decision came in two hours. Finally they did nothing, and they lost the trust of the Chinese that Saadia had built over the years."

Amos Bergner 300px

Amos Bergner, TDB

Bergner, who was appointed as chief executive in January 1985, after being head of Amexco's Edge Act operation, lacks Safra's charisma, his detractors say. "He was a surprise choice," said one former TDB employee. "I think AEB thought that he would fit in because of his ethnic background. But he was too Anglo-Saxon. When he first arrived, he was not bilingual. When he gave briefings and pep talks only half the staff could understand."

Other TDB bankers allege that Amexco has not successfully combined the private banking activities of AEB and TDB. Alger Chapman, now president and chief executive officer of the Chicago Board Options Exchange, was hired by AEB to build up its private banking operations. "l think it was a success," he said. But he did admit that it became confusing to keep TDB's and AEB's private banking operations separate. As soon as Amexco took over TDB, Safra and Benezra had apparently wanted TDB's name changed to emphasise its new ownership. But Amexco vetoed the idea, concerned that TDB's existing clients would be upset.

Bergner expressed confidence that TDB could match any challenge from Safra. Profits for 1986 were up by Swfr10 million from 1985, to Swfr59.3 million. Bergner claimed that TDB's clients had warmed to the idea of discretionary asset management. "All our clients are now part of the Amexco group. They are comfortable with the name," he said. "Our depositors are happy with the service we give them. They give us that assurance all the time. We have done much to retain the European management style and flavour of TDB."

Bergner suggested that TDB had outgrown the days when it was Safra's bank. "Our growth over the past four years has been faster than the growth of TDB during its first 25 years," said Bergner. The client base known to Safra was a minority, when we bought the bank. It is now even more so. TDB is now growing by around 15% a year. What does it matter if we lose a small amount of business to Safra?"

Safra and his team enter the contest equally buoyant. The first $1 billion or $2 billion of deposits from old friends, Keil told Euromoney, should be "easy". In any event, taking deposits from TDB isn't the be-all and end-all of everything. The Lebanese outside Lebanon have $15 billion or so in assets, one Republic marketing executive estimated. The Lebanese and the rest of the world's rich men should be very responsive to Safra's safe haven message after October 19. As Keil puts it: "I think our philosophy has been correct by recent events."