The market maker

This book made available by the Internet Archive.

for Julia and Laura

ACKNOWLEDGMENTS

Thanks are due to the many Brazilians in London and Brazil who took the time to tell me about their country and themselves. In particular I should like to thank Jaime Bemardes of Editorial Nordica, who was an excellent host and guide; Maria Silvia Marques, formerly Treasury Secretary of the City of Rio de Janeiro; Luiz Cesar Feman-des. Chairman of Banco Factual; Jorge Mamao, Feople's Administrator of the Rocinha favela; Meckel Raposo, security consultant; Fedro Faulo de Campos, Managing Director of Oppenheimer in Sao Faulo; and Allan and Stephanie Walker.

I should also like to thank Aidan Freyne and his colleagues at Salomon Brothers Emerging Markets Desk in London for their time and patience, and Fhil Cavendish for all his help.

1

The man sitting opposite, coolly watching me through a haze of cigarette smoke, controlled the financial future of a continent. More important, he controlled mine.

"Thank you for coming in to see us, Nick," he said. "Jamie has told me a lot about you. A lot of good things." His voice was deep, his accent English with a tinge of South American.

"He's told me a lot about you too."

In fact, for the last week Jamie had briefed me thoroughly on Ricardo Ross. His father was Anglo-Argentine, his mother Venezuelan, and he had been educated at a private school in England. He had been with Dekker Ward for ten years, and over that time had transformed it from a sleepy third-rate London stockbroker into the leading force in the Latin American bond markets. Ricardo's elite Emerging Markets Group was now the envy of traders and salesmen in London and New York, and Jamie believed Ricardo would soon become one of the foremost figures in world finance.

And here he was, interviewing me for a job.

He looked good. Monogrammed striped shirt, delicate gold cuff links, thick dark hair immaculately cut. In a nod tow^ard informality, his French silk tie hung

a quarter of an inch below his undone top button, and his shirtsleeves were rolled up just enough to reveal a paper-thin Swiss watch.

"Would you like a cup of coffee?" he asked.

"Thank you."

We were in a cran\ped meeting room in a glassed-in comer of the trading floor. He reached for the phone on the small round table between us and hit a button. "Alberto? Two cups of coffee, please."

In less them a minute a tiny old man neatly dressed in a black suit and tie brought us two small cups of coffee.

"What I miss most living in London is the coffee," said Ricardo. "It's improving, but it still has a long way to go. Try this. It's Colombian. I can promise you, you will not find a better cup anywhere in London." He sat back in his chair, one elegantly trousered leg resting on the other. He allowed the slightest of smiles to play across his narrow, handsome face. I noticed that every few moments the fingers of his left hand twitched, deftly playing with his wedding ring.

The coffee was smooth and rich, an entirely different drink from the Nescafe instant I was used to.

Ricardo sipped his, took a moment to savor it, and carefully replaced the cup in its saucer. "How many of the guys have you seen so far?" he asked.

"You're the seventh."

Ricardo smiled. "A long morning. So, you know all about Dekker Ward by now?"

"I've heard a lot. But it's your firm. You tell me."

"Well, I only run the Emerging Markets Group here," he said, nodding toward the dealing room behind him. "The rest of the firm is back in the City, where they've been for a hundred and fifty years. I can leave them to Lord Kerton, the chairman. We Uke to keep our distance."

They certainly did. We were sitting forty-odd floors up above Canary Wharf, three miles to the east of the City of London, the traditional center for international finance.

''But your group makes ninety percent of Dekker Ward's profits?"

"Ninety-five." Ricardo smiled.

"How do you do it?"

"We're the best at what we do," he replied. "By a long way. We dominate the market for Latin American debt. We lead-manage more bond issues for Latin American borrowers than our next three competitors combined. We trade more aggressively than anyone else on the street. We know everyone. If you want to borrow money, you have to talk to us. If you want to invest money, you have to talk to us. We made this market. It's ours, and there are big profits in it."

"I can imagine there are. But how did you manage to get to that position?"

"We're always a step ahead of the rest of the market. We spotted the opportunity before anyone else did. When Andrew Kerton brought me in ten years ago, I think he just wanted to build up a profitable little sideline to the rest of the firm. I'm sure he had no idea how big we'd become. Back in the eighties when the rest of the world had written off Latin America, we were persuading people to invest again. Mostly Latin Americans who had money invested offshore. We teamed up with Chalmet, a private Swiss bank. They had plenty of clients who were eager to put money back into the area."

He paused to take a drag of his cigarette. His eyes flicked at me to check if I was following him. I was.

"Then the big commercial banks who had lent billions to the region in the seventies began to sell their

loans at a big discount. We helped them, stood in the middle. In the early nineties, many of these loans were converted into bonds, known as Bradys. We traded them, passed them on from the commercial banks to new investors. And in the last few years people have been willing to invest new money into Latin America. So we've been organizing bond issues for everyone from Brazilian glass manufacturers to the Republic of Argentina/'

''Don't you have any competition?"

Ricardo chuckled. "Certainly we do. Everyone is involved in this game. But we were there first, we have all the contacts, we have the best people. If any other firm wants to lead a bond issue for a Latin American borrower, they know they have to invite us as a co-lead. Those are the rules."

"And if they're broken?"

"Then the issue fails. Nothing happens without our support."

"A nice position to be in," I said.

Ricardo nodded. "But we have to be on our toes. That's why I want to make sure we always have the best people in the market. Without that we're nothing."

I glanced out of the window into the trading room beyond, with its jumble of desks and equipment, and the men and women talking, dialing, staring at screens, milling aroimd. The muffled murmur of all this action seeped in through the glass walls. I wondered what these people were doing, who they were talking to, what they were talking about. Numbers flickered on countless computer screens. What did they all mean?

Beyond this mysterious activity stretched the clear blue sky, the empty space above London's Docklands.

Ricardo followed my gaze. "They're young. Smart. Hardworking. They all have different backgrounds.

from the Argentine aristocracy to a high school in Romford. There aren't many of us, but we're an elite. There's no room for passengers. Every one of us makes a contribution."

I nodded. Ricardo was silent, waiting for my next question. What I really wanted to ask was, "In that case why the hell am I here?" Instead I settled on something a bit more intelligent. "What about the emerging markets outside Latin America?"

"Good question. There's not much we can do in Asia. There are plenty of good banks out there already. East-em Europe is more interesting, although even that is becoming more respectable. Did you know Slovenia is rated single A? That's almost as good as Italy."

I shook my head.

"But Russia. That's the real prize. In many ways it's similar to the South American countries, and the profit potential is just as big. Maybe bigger."

"So that's why you might want me?"

"That's the idea. I need someone who speaks Russian and understands economics and who's smart. Someone I can train up in the way we do things around here. Someone who's hungry and who has loyalty to the group. We had some trouble with our Eastern European team recently. I don't know if Jamie told you?"

"They walked out, didn't they? To Bloomfield Weiss?"

"That's right," said Ricardo. His voice was steady, but now his wedding ring was dancing across his fingers, never resting in place for more than a second at a time. "I made a mistake there. I took them on as hired guns, and they left me for a master who'd pay them more. I trusted them. I left them alone to build their own business. In the future I'm going to rely on my own people. People whose loyalty I can count on.

"I trust those people back there. We're all a team.

we all work together, and we all make money together. A lot of money. You see that guy there, the oriental-looking one?''

I followed Ricardo's glance, cind could just see a squat man of about forty laughing down a telephone. "Yes. I met him earlier. His name's Pedro something, isn't it?"

"That's right. Pedro Hattori. He's a Japanese-Brazilian. He's my chief trader. Last year his total compensation was in eight figures."

I thought for a moment, counting up the zeros in my head. Eight figures! Jesus! That was more than ten million pounds. Or dollars, or something. That was more money than I could possibly conceive of anybody making.

My astonishment must have shown, because Ricardo laughed. "How much do you make?"

"Fourteen thousand seven hundred and fifty pounds a year," I said.

"Well, if we take you on we'd pay you thirty thousand pounds a year. If you produce income for us, then you get a bonus above that. How much depends entirely on you. How does that sound?"

"Er... Fine."

"Good. Now tell me a bit about you. Why do you want to join us?"

I launched into my spiel. "I've always found the financial markets fascinating—"

He held up his hand to stop me. "Hold on, Nick. You've spent the last six years studying Russian. If you'd really found finance so interesting, you'd be working in a bank somewhere, wouldn't you? And we wouldn't be having this conversation."

His blue eyes rested on mine, waiting patiently for the truth. I remembered what Jamie had told me. "Whatever you do, don't bullshit Ricardo. All he wants

to know is who you are and what you want. Then heTl decide for himself/'

Well, Jamie had got me this interview in the first place. I would do it his way.

"When I left Oxford, the last thing in the world I wanted to do was go into banking," I said. "The suits, the mobile phones, the silly salaries, the greed."

Ricardo raised his eyebrows. "So what's changed?"

"I need the money."

"Why?"

"Doesn't everyone need money?"

"Some need it more than others."

I paused. How much should I tell this man? Then I remembered Jamie's advice.

"I need it more than most," I said. "I have a large mortgage, which I can't meet, and my temporary job finishes at the end of this term."

"And when's that?" Friday"

'Ah, I see. Can't you get another one?"

"It will be hard. The number of positions for Russian lecturers is decreasing, and there are more of us about. Most are better qualified than me. There isn't much I can do about that."

Ricardo nodded. "So you're hungry. I like that. But how hungry are you?"

"What do you mean?"

"I mean, if you were to have a nice job and a nice salary so you could service your ruce mortgage, would you be happy?"

"No," I said. "If I'm going to do this I want to earn a lot of money."

Ricardo raised his eyebrows. "And what will you do with it when you've got it?"

"Quit. Read."

"]

The eyebrows shot up again. ''Isn't that what you do at the moment?"

I sighed. "No. What I do now is chum out research papers, teach, prepare for teaching, and admin. Lots of admin. And I don't earn enough from all that to pay for the flat I'm living in. I'm trapped. This gives me a way out."

Ricardo was listening closely to all this, focusing his whole being on me, making me feel as though I were the most important person in the world. I was flattered; I couldn't help it.

"I see," he said. "But what makes you think you'll be any good? I mean, you've done well academically. A first in Politics Philosophy and Economics from Oxford. Then a master's in Development Economics. A glowing reference from the head of your department at the School of Russian Studies. But how do we know you can apply all this to the real world?"

"I'm sure I can do it," I said. I thought for a moment, trying to put into words something I had trouble admitting to myself, let alone anyone else. But I knew if I was to get this job, Ricardo needed to understand. "I love Russian literature. I love reading it, I love teaching it. But since my contemporaries left university, I've seen them make a fortune in the City. They're no more intelligent than I am. It's not as if they have any innate business skills that I don't. I suppose I just want to prove to myself that I can do it. I work hard and I learn quickly. I'll figure out how it's done."

"Are you a workaholic?" he asked.

I smiled. "I binge."

Ricardo relaxed and returned my smile. "Well, Jamie said you're the most intelligent person he's ever met. And I trust Jamie's judgment." He watched me for a reaction. He didn't get one. My instinct was to protest at

this, but I had the sense to keep my mouth shut. Good for Jamie, I thought. He was always prone to exaggeration, and for once I was glad of it.

I sat there, letting him assess me, waiting for him to decide.

It didn't take long. ''Good,'' he said. "Now, just stay here a moment. I want to have a word with the guys."

He left me in the conference room while he walked back to his desk. I watched as he called over the people I had seen earlier in the day. Besides Pedro Hattori, I recognized a tall Argentine aristocrat, the American woman who was head of research, the cockney trader, a Mexican salesman, a Frenchman whose job I had forgotten, and finally I saw the fair hair and broad shoulders of Jamie, with his back to me.

The next three minutes seemed to take forever, but finally the group broke up, and Ricardo returned. He held out his hand. "Welcome," he said with a broad smile.