“Scrambling may not be our only problem.”
Kyle’s contention left several seconds of icy silence between us.
In tepid tones, I tried to curve the conversation around our dilemma. “Underneath all our posturing with Bangkok Commercial, we both know the really important thing is that we bought the entire issue with no interference. We own it. We beat out Amsterdam Bank. We beat out a bank a hundred times bigger than us.”
I abandoned the words I was speaking. Raced ahead to evaluate my next statements.
Sidestepping all references to our shortfall of funds, I tried to stack up our advantages to avert Kyle’s forecasts of collective hazard. “I planned it. I put it in motion. And then I made that whole Amsterdam crew think that we’d rolled over and died so that the greedy bastards would keep pre-selling the entire bond issue until they’d over-subscribed it two or three times.”
“Amsterdam Bank can do that,” Kyle granted in small accord. “Like you say, they’ve got a thousand times our capital. And a hundred times more salesmen to sell off the bonds.”
“And that’s their usual style, isn’t it?”
“Of course it’s their style, Paris. When they want a bond issue, they come in with unlimited amounts of cash to buy it up. And then they resell it before they’ve even paid for it.”
“And they make a killing in the profit spread.”
“Of course. That’s the whole idea.”
“And they beat the shit out of small investment banking firms like us every time.”
Kyle nodded. “Well, what else are we supposed to do when we don’t have the capital behind us. Like right now?”
“That’s right. We always get nothing. If we’re good boys and suck up nicely maybe they throw us a few crumbs. But only at their jacked-up secondary pricing. So our profit barely covers our costs of making the sale. And we always convince ourselves that’s okay because we’re making a name for ourselves in the international markets and we’re at least paying overheads while we’re doing it.”
“Well, that’s the way it is when we’re limited by not having any retail deposit base.”
“Yeah, and what else do big banks like Amsterdam Bank always do?”
Purposefully, I waited, making Kyle reduce the pace of his suspicion and reproach.
“Is that a rhetorical question? Or do you really want to waste time discussing it when we’ve got this other mess staring us in the face right now?”
From the flare of frustration in Kyle’s voice, and the slicing gestures of his open hands, I knew I was pawning myself to certain failure if I let Kyle bully me from my rationale and validation. I struggled to tether him to my reasoning, running down my points.
“No. It’s important. What Amsterdam Bank does as soon as they’ve got the entire bond issue oversubscribed is go back to the bond issuer and beat the living shit out of them to lower the purchase pricing. And double their own in-house profits. And what choice does the poor bond issuer have. They have to cave in on pricing. Because they’re guaranteed that the entire bond issue is already sold. And they’re sitting there with visions of dollars dancing in their heads. They can’t wait to get their hands on all the cash. And there sits the Amsterdam Bank gang. Smiling across the boardroom table with a big bag of cash in their hands.”
“Paris, I still don’t know what all this has to do with us.”
“We decided we were going to Bangkok Commercial Bank and put in a bid for the bonds. Put in a bid against Amsterdam Bank.”
“Right.”
“And what did you think was going to happen? What did you really think was going to happen?”
“Probably that we’d get beat out.”
“But maybe we’d get a little side action. Right?”
“Right.”
“So here’s how I worked it.” I could feel myself sprinting to get it all out before he closed down. “As soon as Amsterdam Bank started to heat things up and throw their weight around with their big amounts of cash, I retracted our bid.”
“You retracted our bid?”
“Right.”
“No,” Kyle corrected imperatively. “That takes a full vote from the board of directors.”
“Most bids, yes. But not this bid. There was a retraction clause included in the bid when we approved it and signed it to submit to Bangkok Commercial Bank. To make sure we had a trapdoor out of the deal if we needed one.”
Kyle ploughed at the carpet with his heels. “So?”
His response, curt and cutting. The meanness of the meetings we conducted in private, where there were no witnesses to curb our incivility, our niggardly accommodation of one another.
I stiffened my confidence, spoke sternly and precisely, without pause for further breath, pressing the full accumulation of facts and consequences out at Kyle like a rude shove. “So. When I retracted our bid, I didn’t let any of our clients know. I didn’t let the markets know. I didn’t let our salesmen know. But I made sure to leak the news to Amsterdam Bank. We made sure they knew in their Singapore office. And we even made sure they knew in Amsterdam. So Amsterdam Bank immediately assumed we had rolled over and died. And they went to market and sold the shit out of the issue.”
“And?”
I concentrated on my words, finding it cumbersome to float the facts up into clearer waters above the sediments of doubt and confusion that dwelled within me.
“And then I just waited for them to go back to Bangkok Commercial Bank with their usual strong-arm tactics. That’s were I spent all my time. Cultivating the directors of Bangkok Commercial. They were only too happy to let me know when Amsterdam Bank began to turn up the heat. Then I resubmitted our bid at the original price. Which was now a good deal higher than what Amsterdam Bank was offering to pay for the bonds. And Bangkok Commercial were only too happy to accept it.”
“And what about Amsterdam Bank?”
“The directors of Bangkok Commercial Bank ruled to cancel them out of the deal for breach of contract. We blew Amsterdam right off the map.”
“And what about Amsterdam Bank’s pre-selling of those bonds?”
“You know as well as I do, Amsterdam’s only got two choices right now.”
“They’ve got no bonds to deliver.”
“Damn right they’ve got no bonds to deliver. Because we own all of them. We own the entire issue.”
“So Amsterdam Bank has to renege on delivery.”
“Only two choices. They can renege on delivery and go around the markets with egg on their faces. Or they can come to us and buy all the bonds from us so that they have enough to fill their orders.”
“And we’ll be glad to sell them our bonds.”
“At a profit, we’ll be glad to sell them our bonds. At a hell of a profit.”
Kyle frowned, squeezing his forehead and his chin into pouches and furrows, shook his head in discouraged appreciation of the facts. “They can’t be happy. Amsterdam Bank.”
“They’re furious.”
“And they’ll come gunning for us, Paris.”
“You and I both know they will.”
“And how did you get Bangkok Commercial Bank to even reconsider our bid.”
“I convinced them that we had most of the cash to pay for the entire issue.”