Bretton woods 3 p6

Mobiliare Italiano (IMI), which was the blueprint for all subsequent Euroloans: "We used the IMI loan
to adjust for all the weaknesses of the Iranian loan," says Zombanakis.
He was in competition with the Eurobond players for the same sovereign business. Evan Galbraith, a
director at Bankers Trust International in London (later US ambassador to France), had allegedly
invented the floating-rate note while watching a duck bobbing in his bath. BT and SG Warburg were
chasing a mandate in Italy, a $500 million FRN for Enel. Warburg's Eric Roll was already in Rome
when Zombanakis flew in and persuaded the Bank of Italy that IMI (Istituto Mobiliare Italiano) should
do a $200 million Euroloan instead. "Compared with $9 million in fees for the FRN they paid us half a
percent," says Zombanakis. "The new market for Euroloans then burst into life."
But the Eurobond market was already flourishing. It resided mostly in two founding firms:
White Weld and SG Warburg. The acknowledged visionary and cerebral genius was Robert Genillard,
White Weld's senior partner, who forged an alliance with Credit Suisse, which, through various
permutations, survives as Credit Suisse First Boston (CSFB). The Credit Suisse White Weld (CSWW)
stable trained some of the legendary names in the Eurobond market: Michael Von Clemm, alleged
inventor of the floating-rate certificate of deposit, larger-than-life chaser of mandates from Seattle to
Beijing, "a thinker, a renaissance man", says one admirer; Stanislas Yassukovich, who cemented the
Eurobond market's relationship with London; David Mulford, now international chairman of CSFB,
who also advised the Saudi Arabian Monetary Agency (Sama), served as under-secretary for
international finance at the US treasury presiding over the Brady Plan, and led some of the major
privatizations in the emerging markets; John Craven, former Warburg protégé, adviser to many
institutions during London's Big Bang, stabilizer of Morgan Grenfell after its Guinness scandal, and
finally the first non-German member of Deutsche Bank's executive board. Walter Koller was White
Weld's celebrated Eurobond trader, one of the founders of the secondary market, along with Stanley
Ross, formerly with Strauss Turnbull, then with Kidder Peabody. He founded his own bond trading
firm, Ross & Partners in April 1978, which goaded the big players into greater transparency by quoting
"grey-market", when-issued bond prices.
Warburg's founder Siegmund Warburg had spotted the opportunity to create a new kind of merchant
bank in London, "professional, hard-working, no country houses", recalls Craven. In fact, Gert
Whitman was the true Eurobond genius at Warburg, says Craven: "He had the Fingerspitzengefühl
[sixth sense] and knew which bond issue would get away."
'London was pretty miserable'
Only a handful of other firms saw the potential of this first truly international market and began
syndicating and trading. They included NM Rothschild, Kuhn Loeb, Kredietbank (Luxembourg),
Banca Commerciale Italiana, Skandinaviska Enskilda Banken, Paribas, Hambros and Strauss Turnbull,
then later Swiss Bank Corporation, Orion, Deutsche Bank and Manufacturers Hanover.
The centre of this business wasn't naturally London. Genillard at White Weld favoured Paris or
Geneva. Siegmund Warburg wanted at one time to create an SGW International in Luxembourg.
"London was a pretty miserable place to be," recalls Craven, "beset with post-war gloom, exchange
controls, and the narrow, parochial attitude of the City."
The London stock exchange wouldn't waive the rule that gave 15% of any new issue to the London
jobbers, who had no placing power. "So we listed in Luxembourg instead," says Craven, "hence the
creation of Cedel and Euroclear."
He continues: "We couldn't place bonds in the domestic market, and the government's credit
rating was so poor we couldn't do a bond issue for them or any UK company. So it's a miracle we
got the market going in London."