I can’t remember too much about the day to day activities at JBI as it is a long time ago so I can only give you a few snapshots of the time.
I had to find something to do that justified my presence as the bank didn’t seem to need my full attention. I guess that I was there because the Bank of England insisted on someone with FX experience being on board, although I didn’t realise this at the time. My first attempt at proving my worth was to get involved in the Swiss Franc deposit market. I noticed a quite large discrepancy between the day to day costs of Swissy and the one month interest rate. This led me to lend out some one month and borrow it back day to day. What I didn’t know was that banks inside Switzerland had a restriction on how much they could lend out to overseas banks. However, this was only monitored at the end of each month. Banks being banks, this meant that funds were freely available throughout the month but the market dried up on any period which included the last day of the month. My analysis hadn’t got that far so here I was nicely over lent with a decent margin against my borrowing and suddenly finding that the overnight market (to be accurate, the tomorrow against next day market as it was almost impossible to deal value today in most continental currencies (see the note at the end for why this should be so). was almost non-existent at any price. A pivotal moment in my trading career.
I sat and pondered this wondering what on earth I could do. I tried calling Zurich but the answer was short and sweet – no can do! I was left with only one choice so with my tail between my legs, I called my old employer. John Botevyle was very sympathetic (I can still imagine him grinning as I told him of my problems) and came up trumps with the Swissy that I needed at a price that I could afford. Lesson one learned.
Lesson two was to understand that, unlike in the District Bank, when the boss asks what is going on, he is only passing the time of day and doesn’t really require an answer. I used to have to go into Mr. Battersby – the General Manager of the Foreign Department at the District Bank – on a daily basis and give him a market report. I always took this very seriously because I can’t remember a day when he didn’t ask me something that I had missed! I think he did this on purpose as I never had any feedback to say that I was lacking in my approach. David Mann, the manager at JBI regularly used to go on long lunches with his old pals and come back full of ideas that worked in big banks but were out of our scope. However, when he used to breeze into the office around 2.45 each day, he always asked “what’s going on then?” In the early days, I tried to answer him but soon realised that it was just his way of saying “Good Afternoon, sorry that I am late back”.
Lesson three was to fully understand the size of the bank’s balance sheet. Henri Jacquier and David Mann worked tirelessly to expand the range of banks that would deal with us. They relied very heavily on business put out by JB in Zurich but, who cares, it did the job and we had an expanding range of counterparties to trade with. I was up to speed with all of this as I was the one doing the trades in the market. Then, one day, I was brought up to see quite how small we were. JB in Zurich did a lot of business with Fidelity – the huge investment corporation in the USA – and they accordingly passed a piece of business our way. A lot of kudos was gained by putting what were know as tombstones in the Financial Times. Tombstones were advertisements announcing that ABC Bank had arrange X million financing for XYZ Corporation and that it was fully subscribed. The idea wasn’t to assist in the financing – that was all done before – but to show off that the deal was done. David Mann was desperate for us to have one of these and arranged a fund raising exercise for Fidelity – around $30,000,000 or so as I remember. The funds had a due date when they had to be paid. They arrived in our bank account on the Friday when the due date was the Monday. This meant that I had to invest the money over the weekend. This was the biggest deal that I had done so far so I was quite excited about it. Eventually, I placed the funds at a good price with the Chemical Bank London. (Chemical Bank was a large New York bank at that time – now merged into JPMorgan Chase) It was only later in the day that I was reminded that our total balance sheet on the average day was around £5,000,000 or $12,250,000 so I had placed close to 2 1/2 times the total value of the bank with one outside institution! Not clever. Mind you, lending it out in $1,000,000 bits would have resulted in a much worse rate and would have given our back office more to do than the normal week!
Time plodded on and we worked our way through the period where we were just a Licensed Deposit Taker placing green Forms E with the BofE every time we needed to do a bit of arbitrage. Eventually, we did our time and around February 1969 we were give Authorised Dealer status. This freed us to become a normal part of the FX markets and should have heralded a new dawn for me. However, I had been having my own issues with working at JBI. Firstly, I was angling to get posted to Zurich for a time. Mind you, as Valerie had put the brakes on Canada, I was living in hope that she would finally agree. To this end, JB I were paying for German lessons for me. These took place at lunch times at the City University. One would have thought that learning German in a German speaking Swiss bank would have given me lots of opportunities for practice. In fact, the Swiss pride themselves on their language abilities and whenever I spoke German to them, they answered in English! Eventually, I came to understand that the scope for me at JBI was very limited and had a long discussion with Henri about my future. I was getting rumours that they were to employ an FX Manager over me and I was very upset as I felt that I had seen them through so should have been given the chance. Again, I don’t think it occurred to me that the BofE were pushing them to get some more experience on the team. Any way, the discussions ended with Henri telling me that I must speak to him again before I made any decisions because he really wanted me to stay.
I am afraid that, once I felt I must go, I have tended to go no matter what. I started looking in the FT on a Thursday which was the traditional day for FX market appointments. As a result, I had an interview with the American Express Banking Corporation, London branch in Abchurch lane and got offered a job there. When I went into Henri to tell him, he was most disappointed until I explained that I was getting a pay rise from the £1,600p.a. I was now getting at JBI up to £2,000 p.a. at Amex. Remember that in May the previous year, Valerie and I were earning about £1,600 between us – and she was still at work at this time – but not for long. Did I mention that Valerie was expecting our first child? No? Well that was a further drive to get some more income. I had now got to the point where I had ensured that our income would be a bit larger when she left work than we had 9 months earlier so I was very pleased with the way that things had worked out. Additionally, Amex had a good name in the market so I was going somewhere that would enable me to trade normally.
Note: Most continental banks had a cut off at around 10 a.m. for inter-bank payments (unlike London where the cut off was 3 p.m.) As London is normally one hour behind most of Europe, this meant that any instructions had to be sent by 8.45 to be safe. At that time, most of the London banks worked from 9 a.m. hence, London worked on balancing tomorrow rather than today.