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Sunday, November 6, 2011

Our Nomination for Interim Prime Minister: Minos Zombanakis-The Ultimate Greek Banker

Minos A Zombanakis
The Ultimate Greek Banker

Greece is once again face to face with its destiny... 

As the world watches, after weeks if not months of political turmoil and roller coaster emotions as we go from one bailout talk to the other, from IMF to  EU to Eurogroup and even G20 meetings, we watch in dismay as Greece's future is gambled on.

In the last few days, weeks, months, two years, we have watched our political leaders squabble unable or unwilling to come to an agreement, on anything almost...let alone what they need to do today, forming a government of National Unity.

As they continue to play stupid and childish games at the expense of the country, we thought we would make our own nomination for the post of interim Prime Minister.

If Greece is going to have a banker for Prime Minister then our nomination goes to the ultimate Greek banker,  Mr  Minos Zombanakis, a man who was known simply as The Greek Banker. 

With the international connections and impeccable background which are essential qualifications for the job of leading Greece through this period of economic crisis, Minos Zombanakis could well be the ideal person to fill this extremely important position at such a critical point in time. 


Kalyves Apokoronou - Crete, Greece

Often credited with being the 'father' of the interest rate formula known as LIBOR, Global Greek Minos Zombanakis was born in Kalyves, one of Crete's beautiful coastal villages and educated at Harvard. He is considered a pivotal figure in the history of the Euromarket, the first banker to make full use of the syndicated loan market after establishing Manufacturers Hanover Trust in London in the late 60's.


Minos Zombanakis, whose friends' list read like a Who's Who of the international and financial elite, is one of the world's savvy wheelers and dealers. A respected and popular figure both at home and abroad, his advice was always sought out at every opportunity. This was particularly obvious during the Athens Stock Exchange boom in August of 1999,  when you would often see him at the beach or at the local taverna in animated discussion with ordinary locals but also with people such as Yale educated Stavros Thomadakis, then Chairman of the Capital Market Commission of Greece and fellow native of Chania's  Apokorona district.


Equally at home in Crete as he is in London, Mr Zombanakis has often hosted some of the world's most famous citizens at his home in his native Kalyves, a town he has supported at all levels and of which he has been made an honorary citizen. It is not by chance that the Kalyves City Centre is named Minos Zombanakis in his honour.


Following vice President Al Gore's unsuccessful bid for the Presidency of the USA he spent much needed down time at Mr Zombanakis' home town, incognito, sporting a beard and a Mexican hat...

In 2010, the Belfer Center launched a new professorship named for Zombanakis, chairman of the Chase Manhattan Bank's International Advisory Council for Europe, Africa, and the Middle East, a Harvard Kennedy School alum and member of the Belfer Center International Council. Harvard Kennedy School celebrated the professorship with Zombanakis and his family in April that year.

Minos Zombanakis and Family at the Harvard Celebrations 
Picture Source: Belfer Center, KSG, Harvard

The Minos A. Zombanakis Professor of the International Financial System is defined as being aimed at 'a distinguished professor or professor of practice whose research and teaching will illuminate major policy issues of the era in ways that will be informative to policymakers addressing challenges of the international financial system'.

In fact, in April this year, former Vice President of the European Central Bank, esteemed economist Lucas Papademos  was appointed the inaugural Minos A. Zombanakis Professor of the International Financial System at the John F. Kennedy School of Government at Harvard University. 

It was because Papademos' name has been bandied around as possible interim Prime Minister of Greece in the last few days that we decided to nominate another, much more influential Global Greek for the position.

At 85 today, you might say Minos Zombanakis age might be against him, but let's not forget we have a precedent: Economist and banker Xenofon Zolotas who headed the Ecumenical Government formed in 1989 at the age of 85...

Why not?


Readers might be interested to read Mr Zombanakis' views on how we got to today's  economic crisis. In an address to the Hellenic Bankers' Association in 2008, entitled The Financial Crisis: How did we get here?, Mr Zombanakis had this to say:

'Let me start by reflecting on the present turmoil in the financial markets. 
Though it is not completely unprecedented in my experience, it is as scary as anything since the original oil price shock of the early 1970s, and it is still very uncertain as to its outcome. In my view, it has its roots in the powerful forces which have completely transformed the financial landscape in recent decades – forces that have transformed the financial system into a giant lottery.

It is worth glancing back to see how these forces originated, and how they interacted to create the toxic mix we have today, because there may be lessons.

I would single out three: financial innovation, deregulation of the finance industry, and monetary policy. I mention them in that order because that is the order in which they occurred.
 
Taking financial innovation first, I am talking here about innovation in two senses: the invention of new ways of doing business, and the globalisation of financial markets. These trends essentially began back in the 1960s with the development of the Euromarkets, a process with which I was personally and intimately involved. 

The phenomenon of “stateless” money – mainly dollars which had left the US or avoided to be deposited in US banks – created a resource which opened up international financial trading on a completely new scale, and which allowed virtually any bank with international ambitions to participate.
These markets evolved in essentially two forms: securities and loans. The eurobond market was the first to emerge, in the early 1960s, as a means for international companies to tap new sources of capital at a time when national barriers were coming down. But though they were very inventive, these markets were rapidly overtaken in size by the syndicated loan market which emerged a few years later, in the late 1960s/early 70s. That, I am proud to say,was my contribution. 

Within five years of the first Euroloans that Manufacturers Hanover Ltd arranged for Iran and later Italy, deals were running at the rate of hundreds of billions of dollars a year.
 
This process was made easier by the willingness of the monetary authorities of the day to allow these developments. Or, more accurately perhaps, I should say their inability to do anything about them because we must remember that the US (under Presidents Kennedy and Nixon) introduced tough capital controls to prevent the outflow of dollars. But generally “willingness” is the more accurate term because these new markets took pressure off hard-pressed domestic capital markets, and opened up important new sources of capital for business and sovereign borrowers alike, which was good. 

The process was also facilitated by the invention, of an interest rate formula known as LIBOR, which enabled large groups of banks, several dozen, to put together very large loans. Again, this is an area where I was directly involved.
 
While I am proud of my contribution, I must accept that the history of the Euromarkets is not entirely positive, though at the time it helped countries to finance balance of payments deficits arising from the sudden increase in oil prices. As we know, these markets soon exhibited the sort of “irrational exuberance” which we have come to associate with almost all large scale financial developments. They got carried away with their success. 

By the end of the 1970s, the international syndicated loan market, in particular, had become enormously competitive, and was churning out loans at the rate of over a hundred billion dollars a year. Loans were literally being forced on ill-qualified borrowers, many of them unsophisticated Third World countries, and when they couldn’t repay, they were given more loans to keep them current. By this time, I was no longer directly involved in the loan business, and I am on record as warning about “the monster” I had helped create. 

But, rather like Dr Frankenstein’s own monster, it had become unstoppable....'


Unstoppable indeed...the results manifest themselves before us...

Καλή μας δύναμη! 
Strength and courage for the hard road ahead! 


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