Master of the Universe

Let's assume I want to be a part of it.

How should I act and what can I expect?

Collect the necessary 'pats on the back' without a murmur.

You get them by doing 'one-nighters' and 'two-nighters'.

A 'one-nighter' means spending the night in the office.

A 'two-nighter' is two nights in the office or working straight through.

If you do this often enough ...

eventually someone will entrust you with larger tasks.

But only if you don't arouse the slightest doubt.

Or even hint...

that things could be done differently.

No political statements.

And:

Absolute loyalty to the organisation.

Basically you have to be willing to give up your life.

How does a 'two-nighter' work?

Well, the boss comes to you and says: "Listen up.

Something just came in. The day after tomorrow,

we have to present a concept to company X, Y, Z:

How they can finance the buyback of 10% of their shares ...

and an estimate of how this will affect the market, etc.

Sorry.

I know it's your birthday and you wanted to go out with your girlfriend,

but I can't think of anyone else I can pass this on to."

This one's in the bag.

Then he sits down and makes a PowerPoint presentation.

At 2:00 a.m. he falls asleep at his desk.

At 5:00 a.m. the cleaning lady wakes him up.

Then he gets back to work.

Don't question whether it makes sense to buy back those shares.

Basically it's like being in the army.

I've been talking to our lawyer.

There shouldn't be any problems

as long as we don't mention names or disclose any business secrets.

We may not infringe on any personal or privacy rights.

I'd suggest you confer with your lawyer as well,

also regarding the work contracts,

to make sure we're on the safe side.

That building over there

with the round tower on top ...

If you try to picture it ...

You see the white pane on top...

Try to imagine... that's where the Citibank logo was.

That was the Citibank headquarters.

Then Merrill Lynch moved in.

On 20 floors. Later on, Bloomberg.

Now it's the Bank of Communication from China.

I think that's about it.

Here we have...

You can see the leap the Commerzbank has made.

The building with the green roof ...

was the original building of the Commerzbank in Frankfurt.

Then the first tower came.

The dark brown one between the Japan Tower and the Taunus Tower.

Right behind it soars...

the latest building of the Commerzbank.

They added an antenna to make it higher than the Deutsche Bank.

Looks like this was supposed to be the trading floor.

Those are the server racks.

If this was meant to be a trading floor,

then it's a really small one.

The ideal trading floor doesn't have any walls,

and preferably no such posts.

It's rather like a soccer field: open without any boundaries.

In the past, you relied more on verbal communication.

You had to call out to each other. That's why it was important.

People stood up and gestured across the room

to clarify things.

Today you have small chat rooms.

You don't have to shout anymore.

The trading floors of the major banks,

I think the biggest one is UBS in Greenwich.

It has about 1000 workstations.

1000 people on one floor.

I don't know how many fit in here. Maybe 100, 150.

If even that.

It's sort of a sacred place:

You pass through the security gate,

and go to your desk and push a button,

and it goes 'bzzzz'.

Then ...

your neighbour arrives and says, "Good morning".

He pushes his button and it goes 'bzzzz'.

Eventually everyone's there,

and the whole thing picks up speed.

Around 9 or 10 a.m. it starts getting loud.

It's like the command centre of Starship Enterprise.

This sounds crazy, but somehow you feel...

It's the ingredient

that makes you feel like the Master of the Universe.

You sit there in a really comfortable chair.

There are 6 or 8 screens all around you,

with funny things flickering on them.

You have 2 keyboards and a telephone and a mouse or two.

You can just...

It's not for everybody, but I found it quite fascinating.

That was 1986. Thatcher and Reagan.

They basically unleashed the first wave of privatisation.

Here in Germany,

we'd had a cosy capital market zoo.

Up to then.

Everything was regulated.

Then foreign banks were licensed in Germany.

And these people from America came.

We thought they could walk on water.

They wore strange braces

and broad-striped shirts.

They explained to us how things work.

It was fascinating.

You were sent to seminars.

They showed you how 'swaps' work,

how 'options' work and 'financial innovations'.

'Financial innovations' were all the rage.

We hung on their every word.

We held them for godlike creatures who'd been sent to us.

Then all those instruments were approved in Germany, too.

Which, I'd like to emphasize, was not bad.

It was ...

a very anachronistic system.

A closed system with designated regional entities.

It was unsuitable for moving the economy into the 21st century.

The real economy and the financial economy were put on par. Technically.

Then the financial economy was a step ahead of the real economy.

That's the situation we're in right now.

Is deregulation to blame? No.

Was it a prerequisite? Yes.

Back then... It was a Bavarian bank.

I spent weeks driving through the countryside.

As far as the Czech border. I can't remember where all I went.

We gave lectures to expand our product range.

Our audiences weren't exactly thrilled by my presence.

You might be able to imagine why given the regional context.

"We've always done it this way, huh."

They don't want to deal with new things.

I used to tell people:

"You're far from Frankfurt. You're far from London.

This doesn't mean no one's going to come see you, but it might take longer."

I wasn't even 30 at the time.

This was a way to make a name for yourself,

because it was very specialized knowledge.

There were only 10 or 15 people at the bank who knew this stuff.

If you were one of them, then age was no issue.

You were considered the expert ...

no matter how old or stupid you were.

No, it was ...

a chance for quick fame

within the bank.

Did you succeed?

That's for others to judge.

I couldn't say. - At an early stage you were...

I was promoted very quickly.

And I made more and more money really fast. Naturally.

Were others faster? Yes.

Were a lot of others slower? Yes.

We were a whole cohort of people my age.

We sailed right through those banks.

Many of the older co-workers had a lot of skills,

but they weren't keen on working with computers.

Whereas we sat there for nights on end,

trying to program some Excel spreadsheets.

Calculation models for financial tools ... things like that.

It was an industry.

Like Bill Gates and his fucking garage.

Five years earlier or later,

and the man would have become an accountant.

But he was in this bloody garage at the right time.

We happened to be there when computers were brought in.

And we were interested in computers ...

and ...

English books about financial theory.

It was like a gigantic sandbox,

where you played with your moulds.

We couldn't mess up anything.

Nowadays a lot can go wrong in the sandbox, but not back then.

It was awesome. We always came up with something new.

Some weird products. I once invented oil bonds.

You earned heating oil instead of interest.

The oil price was...

I'll just give you any old number: $30.

I wrote a whole paper about it.

How they needed to be constructed,

how to do the hedge, etc.

Then my boss said to me:

"Forget about crap like that!

First there has to be a war in Iraq.

Then the oil price has to skyrocket before anyone will buy that stuff."

I think that was 4 days before Hussein invaded Kuwait.

I found that quite amusing.

I'll give you a simple example of interest bets.

Lots were sold to municipalities and mid-sized companies.

It's a bet on interest rate changes between the Swiss Franc and the Yen.

And ...

it's a position a German municipality has nothing to do with.

No one bets on anything obvious,

because you probably wouldn't find anyone to bet against.

But sometimes...

the models banks use ...

reveal very unusual situations.

It's called a 'Black Swan'.

What is the probability that a black swan will swim by ...