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  • Fake or philistine: the jury’s out

    September 28, 2011 @ 12:28 pm | by John Collins

    Alessio Rastani, the London day trader, has become a viral hit around the world following his rather in your face interview with BBC News on Monday. Rastani isn’t just a business story – even my Pricewatch colleague Conor Pope has got hot under the collar about this guy.

    If you haven’t seen the interview with the “independent trader” (echoes of Del Boy and Rodney?) who claims to dream of another recession and that Goldman Sachs rules the world, here’s the clip:

    YouTube Preview Image

    Almost immediately after the appearance speculation began to mount that Mr Rastani was a fake and bore a striking resemblance to a Yes Man that had pretended to be a spokesman for Dow Chemical. As a result the BBC press officer was forced to issue a statement stating that Rastani was not a fake. Never missing an opportunity to have a pop at the Beeb the Telegraph published an article claiming he was a fake, although if you read the article he’s actually an attention seeking lowly day trader rather than a fake.

    My take: Rastani went on the show to get a reaction. Most of what he said isn’t new (remember Rolling Stone journalist Matt Taibbi’s description of Goldman as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”) it’s just that he managed to get so much into his three and a half minute slot and was so unapologetic about it.

    The best comment on the whole thing comes from Fiona Walsh, our London Briefing columnist:

    “By Tuesday evening, his 3½-minute interview had clocked up almost half a million hits on YouTube and, such was the candour of his comments, there was widespread speculation that it was a hoax. Seasoned City hands thought otherwise, however, and marvelled that someone had at last revealed what we all know to be true – that traders are in business to make money.

    Only an independent trader would have been be foolish (or publicity-hungry) enough to speak as unguardedly as Rastani; anyone employed by one of the major investment banks would have been sacked before he left the studio.

    In fact, the only part of the interview that did not ring true was the bit where Rastani said he wanted to help people. That part surely was a hoax.”

  • What’s $2 billion between friends?

    September 16, 2011 @ 12:51 pm | by John Collins

    Kweku Adoboli's Facebook profile pictureSo UBS “Delta One” trader Kweku Adoboli (left)  joins the rogues gallery of traders who have lost their employers millions or billions with dodgy trades which their superiors claim to have had no knowledge of. At $2 billion, he has some ground to make up on Jerome Kerviel, who lost $7.2 billion at Societe Generale in 2008. But he easily beats Nick Leeson, the Galway-resident who brought down Barings Bank with losses of $1.4 billion in 1995, and John Rusnak, the US foreign exchange trader, who lost $691 million at AIB’s US subsidiary in 2002.

    The truly shocking revelation has come this morning from the BBC’s business editor, Robert Peston, who says UBS’s internal controls did not pick up Adoboli’s massive bets. In fact they only found out about it on Wednesday morning when the 31-year-old came clean. This is hugely concerning for a bank that lost €50 billion during the subprime crisis in 2008 and had to be bailed out by the Swiss taxpayer. It also gives the lie to the statement by UBS chief executive Oswlad Grubel that the rogue trading does “not change the fundamental strength of our firm”.

    Adoboli was a trader on UBS’s Delta One desk, a shadowy area of banking that allows banks trade with their own money largely out of the sight of regulators. As one commentator has noted, most bank chief executives don’t understand what actually happens in these units. Delta One is a rapidly growing area of derivative trading and one you are likely to hear a lot more about after this.

    And on a slightly lighter note, if Adoboli posted on his Facebook page (now converted to a UBS community page by Facebook) that he needed a “miracle”, surely someone at UBS should have got concerned??

  • Bartz out investment bankers in at Yahoo

    September 7, 2011 @ 5:06 pm | by John Collins

    She may have been a highly regarded tech executive when she joined Yahoo in January 2009, but the summary firing of Carol Bartz as chief executive of the struggling web property has been greeted positively by the company’s investors. When news broke overnight that Yahoo chairman Roy Bostock had given Bartz the flick over the phone the aging internet company’s shares shot up 6 per cent. At the time of writing they are still up almost 5 per cent. (more…)

  • Michael Lewis profiles our new overlords

    August 16, 2011 @ 3:03 pm | by John Collins

    Germany now owns Europe and if the rest of us want to enjoy the benefits of European political and financial union then we better start acting more German. That’s the broad c0nclusion of Michael Lewis’s latest article on the European economy which is published in this month’s Vanity Fair. As with his previous articles on Ireland, Iceland and Greece it’s well worth a read.

    Lewis explores the German national character which he reckons is overly scatalogical and concludes that any society that is obsessed with cleanliness on the outside and dirt on the inside was bound to be a sucker for triple A rated bonds stuffed full of sub-prime loans.

    There’s an interesting line about Ireland, and one that should concern us if European leaders continue to play catch up with this crisis:

    The German government gives money to the European Union rescue fund so that it can give money to the Irish government so that the Irish government can give money to Irish banks so the Irish banks can repay their loans to the German banks. “They are playing billiards,” says [German economist Henrik] Enderlein. “The easier way to do it would be to give German money to the German banks and let the Irish banks fail.”

    Some commentators, including my colleague Dominic Coyle last Monday, have pointed out that the nub of the issue is whether the Germans want to pick up the tab for the rest of the euro zone. A senior official at the Bundesbank suggested to Lewis that Germany may be in a better position to do that than many people think:

    “We have 3,400 tons of gold,” he said. “We are the only country that has not sold its original allotment from the [late 1940s]. So we are covered to some extent.”

    Beautifully written and researched as usual Lewis’s article provides plenty of food for thought. Hopefully it will be read in the Élysée Palace and Bundestag.

  • Credit crunch II: the sovereign edition

    August 8, 2011 @ 4:10 pm | by John Collins

    So three years on from the global banking implosion we have another rapidly moving crisis. This time instead of it being banks that are having “liquidity problems” and which are “too big to fail” it’s nation states. Just as the banks problems were caused by the availability of cheap credit which allowed them make crazy loans that weren’t backed by their own reserves, it has now become blatently obvious that governments were also taking advantage of low bond yields to build up massive piles of debt.

    To use an Irish banking analogy, Greece is Anglo/Nationwide i.e. a basket case, Portugal, Spain and Italy are looking like AIB, caught out when cheap cash dried up and investors began to question their ability to repay. Let’s just hope Germany and France don’t turn out to be Bank of Ireland.

    The one positive of this current crisis is that Ireland is no longer in the eye of the storm. At the time of writing market sentiment towards Ireland is actually improving. The yield on our ten year bonds is now “just” 9.96 per cent having been north of 14 per cent as recently as the middle of last month. That says bond investors think we are a less risky bet and Ireland might actually find its way out of this morass. And the positive corporate news today from Data Electronics Group, Jacob Fruitfield and Boston Scientific, suggest there is an appetite for investment in Ireland.

    It’s hard to see where present events, which now constitute a global crisis and no longer just a European one, will lead. But the similarities with the original credit crunch suggest things could really come to a head in September. If history tells us one thing, it’s that financial markers have a habit of imploding during the Autumn. From the Wall Street Crash of 1929 to the Lehman implosion in 2008 we are heading in to the most volatile time of the year. It’s going to be an interesting couple of weeks.

  • Outsourcers poised for global domination

    June 21, 2011 @ 2:39 pm | by John Collins
    The Infosys campus in Pune, India

    The Infosys campus in Pune, India

    Last week in India, I had the chance to visit the campus of Infosys in Pune, just outside Mumbai, which is home to 25,000 technology workers. It was an eye opening experience.

    The reaction from most people I told about this visit was “Infosys? They are the massive outsourcing company?”. Yes, they are but that tells only a fraction of the story of the company which was founded in Pune in 1981 by 7 engineers and now employs over 130,000 staff in 32 countries around the world.

    As Mritunjay Singh, the executive who gave us some insights proudly pointed out, the traditional call centere or voice-based business, accounts for just 15 per cent of revenues. He outlined how the firm is no longer just an outsourcer but has “pioneered the global delivery model”. Yes, some of your operations might be run from Pune or Bangalore if you are an Infosys customer, but it also has highly qualified consultants that can come and work in your office and advise you on your strategy. And 600 Infosys staff now devote themselves to applied research on its own suite of increasingly sophisticated products.

    The company made the conscious decision to transform itself in 2007 and despite the global meltdown in 2008 is well down the path. Its client list includes 4 of the top 5 aerospace and defence firms globally and 4 of the top 5 US banks. Infosys has annual revenues of $6 billion and is targetting $15 billion within two years.

    Infosys also has an interesting ownership, by Indian standards at least. The 7 founders hold 20 per cent of the stock, employees have 20 per cent with the remaining 60 per cent in the market.

    My favourite line from Mritunjay Singh: “In God we trust, everyone else must bring data”.

    The Pune campus really is in a different league and surpasses in many cases the environment at top employers in Silicon Valley. It was also without a doubt the cleanest place I saw during my week in India.

    The 130 acre campus has 3.5 million sq feet of buildings with another 1.2 million under construction. The average age of employees is 26-28 and competition for jobs is fierce – less than 3 per cent of candidates are successful. There’s even a 1,000 room hotel on the campus for staff visiting from other sites.

    It was a short visit but I left with the impression that anyone writing off Infosys as “just an outsourcing operation” is in for a nasty shock.

  • Which India should Ireland be trading with?

    June 10, 2011 @ 12:20 pm | by John Collins

    View from Mumbai's financial district

    There are several “Indias” and making comparisons between China and India is a “futile parlour game”.

    That was the message from Ireland’s ambassador to India, Ken Thompson, when he addressed a group of Irish business people who were in Mumbai last night for the Entrepreneur of the Year programme. (more…)

  • Is Irish business missing Indian opportunities?

    June 9, 2011 @ 1:44 pm | by John Collins

    Kiran Mazumdar Shaw outside a Biocon facilityIreland did €1 billion in trade with India in 2009, up 7 per cent on the previous year. When signing a bilateral free trade agreement last month Minister for Enterprise, Jobs and Innovation predicted 10 per cent growth between now and 2015.

    But contrast that with China where bilateral trade was worth €3.2 billion in the first 11 months of 2009 alone. Despite the dismal economic situation exports to China grew 14.6 per cent during that period and we had out first ever trade surplus with the Asian country. In fact we were one of the few EU countries to maintain growth in our exports to China during the recession. (more…)

  • Mumbai calling Irish entrepreneurs

    June 8, 2011 @ 10:13 am | by John Collins

    So I’m sitting in Terminal 5 of Heathrow Airport waiting to board a flight to Mumbai, India. For the next week I’ll be in India’s largest city (pop: 12.5 million) and the neighbouring city of Pune with a contingent of about 70 Irish business people who are travelling as part of the Ernst & Young Entrepreneur of the Year competition. Each year the 24 nominees for the competition, plus those nominated in prior years, head off on a “retreat” to network with their peers, and in the case of the nominees, be grilled by the judges.

    Previous trips have gone to Haiti, the US, Brazil and China so with this trip to India the Irish entrepreneurs will have been exposed to the three of the four countries that make up the BRIC and which are expected to be the engines of global economic growth for the foreseeable future. Having never been to India before I’m excited at the prospect of visiting a country that has generated such wealth in recent times but is also home to unrelenting poverty. I’m sure a lot of my preconceptions will be blown away. (more…)

  • Business podcast: June 2nd

    June 2, 2011 @ 7:40 am | by John Collins

    John Collins talks to Castlepalooza promoter Cillian Stewart, hears from Barry O’Halloran about Harland & Wolff’s green transformation and discusses Ireland’s digital progress with Alto chair Ronan Lupton.

     
    icon for podpress  Standard Podcast [24:46m]: Play Now | Play in Popup | Download
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