Come back Macquarie Bank, all is forgiven
For most of this century, it’s been very hard to love Macquarie Group, as the bank is now known.
It should be held up as a great Australian success story - a home-grown investment bank that has followed only a handful of local companies in creating a truly global business. Think Westfield (shopping malls), BHP (rocks and oil), Foster’s (beer and wine), CSL (blood and plasma) and News Corporation (fine company, generous employer).
It built a business model - buying, owning and milking infrastructure assets - that, at least until very recently, was being emulated around the world.
It took on the best of Wall Street, and even the stuffy British during an audacious but ill-fated takeover bid for the London Stock Exchange, and generally won.
But every time you felt the passion stirring for MacBank, it went and did something stupid. Like pay its top executives $33m (that’s $4000 an hour, generously assuming your average investment banker works 20 hours a day, 365 days a year).
Or charge you $7 every 30 minutes to drop Gran at Sydney Airport. Or list BrisConnections on the stock market last year to claim the coveted title of worst float for, oh, ever.
But there is good in Macquarie. I can feel it. And we’re very fortunate not to be talking about this unloved icon in the past tense. MacBank shares were already on the skids when Wall Street rival Lehman Brothers collapsed in September last year. From a whisker short of $100 in mid-2007, they collapsed below $40, then $30 and then, in February, $20. In one terrifying week, they lost almost exactly a $1 a day.
If there’s a lesson to be learned it’s to never to take an empire built on debt into a global credit squeeze.
MacBank put on a brave face at the time, saying it had enough stashed away to see out the storm. But behind the scenes it was urgently lobbying the Rudd government to guarantee deposits and to extend the ban on short-sellers - an insidious breed of traders who profit by destroying otherwise healthy companies or an essential part of any functioning market, depending on who you talk to.
It was also selling assets, rearranging debt, sacking as many as 1100 staff and using the government guarantee on borrowings to raise cash in overseas markets.
As plenty of people in the financial world will tell you, MacBank appeared to be sliding towards the abyss. But even some of its fiercest rivals would have been appalled to lose our home-grown bank, and not just for the crisis it would have set off in the banking system.
It didn’t come to that. MacBank pulled up and stock market investors realised, finally, that the selling had gone too far. Last week’s cash call on ordinary shareholders - three times oversubscribed - showed investors retain faith in the stock. (The stock repaid that faith with a sharp rally to hand those investors an instant profit - just like the MacBank of old.)
Remarkably, plucky little MacBank is now among the strongest players in its field. While other investment banks continue to sift through the wreckage of their once-mighty empires, or deal with conflicting demands of new government (read taxpayer and voter) shareholders, MacBank is scouring the battlefield for opportunities to pick off weaker rivals.
The question now is whether a different MacBank will emerge from the crisis _ one that is perhaps a smidge more humble, and cares a little bit more about its image - or whether old investment banking habits refuse to die. (This week’s last-minute bid to gatecrash the OZ Minerals takeover and scoop out $87m in fees for its trouble suggests the latter.)
MacBank used to make a lot of noise about its “reputation’’ - a key asset for any investment bank - but then thumbed its nose at critics as the money rolled into the MacBank factory and millionaires rolled out. Paying too much to drive to work on Sydney’s M4? Ride a bike. Some clients, too, felt that the bank was more interested in generating fees than their welfare, although plenty of others love the Macbankers.
New chief executive Nicholas Moore today presents a much better public face than the filthy rich investment banker who in 2002 injudiciously said of Alan Jones, ``I don’t think anyone cares what he thinks’‘.
He gives the impression of listening to the critics - his pay’s just been slashed from $26.75m to a $290,756 (poor bugger). That takes at least one target off his chest.
Now show us a little love. And you might just get a little back.
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