Fwd: Minos Zombanakis, banker, 1926-2019 _Financial Times 18.1.2019

The apparent inventor of LIBOR (see below), important figure. Readers of ER Dodds et al will note that this Cretan claimed to have no sense of “shame.”

Dan

> Subject: Minos Zombanakis, banker, 1926-2019 _Financial Times 18.1.2019
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> Minos Zombanakis, banker, 1926-2019
> The ‘father of Libor’ with a sharp eye for opportunity
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> David Lascelles. FT 18.1.2019
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> The Greek innovator played a central role in the evolution of the Euromarkets in the 1960s and 1970s
> Minos Zombanakis was one of the leading innovators of the international financial markets of the latter half of the 20th century.
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> Zombanakis, who has died aged 92, rose from a modest background in Crete to play a central role in the evolution of the Euromarkets in the 1960s and 1970s. In particular, he was instrumental in creating the syndicated euroloan market and the pricing formula that went with it: the London Inter-Bank Offered Rate, known as Libor, which later fell into disrepute. By the time of its disgrace, he had distanced himself from the market, calling it a “monster” and a “prostitution racket run by pimps”. But it has since staged a strong recovery, and Libor is still in operation — although regulated with criminal sanctions .
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> Zombanakis, a distinctive, lanky figure with a smudge moustache, succeeded in the banking world through a combination of good fortune, financial skill and an eye for opportunity.
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> He was born in 1926, the son of a small-town mayor on the Greek island of Crete. At the outbreak of the second world war, he worked in a British officers’ mess where he picked up a valuable knowledge of English. When the Nazis landed, he fled to Athens in an open boat and got a job liaising between the postwar Allied aid effort and the Greek central bank. Though he possessed only a modest accounting qualification, he was taken on by the Bank and posted as their representative in Washington DC.
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> Conscious of his lack of serious credentials, Zombanakis talked his way into Harvard university with characteristic panache and earned a Masters degree in public administration. With this he began a career in commercial banking as the Mediterranean representative for Manufacturers Hanover Trust financing international trade.
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> It was during this phase that he displayed his inventiveness. The 1960s were a period when postwar currency controls put serious obstacles in the way of international finance, challenging bankers to find ways through. In particular, the US imposed a tax on corporate borrowing, which drove loan dollars abroad, notably to London. Zombanakis was struck by the large pools of “eurodollars” floating around. He also noticed growing international demand for loans that went beyond the small, short-term amounts being offered by banks in traditional ways.
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> He devised a means of matching supply and demand by putting together syndicates of dollar banks under a common contractual umbrella, pricing the loans using a formula based on the banks’ cost of funds: the Libor. He launched the first such loan — $80m for Iran — in 1969 and, despite warnings that it was bound to fail because syndicates would crack up, it proved a huge success and was swiftly imitated by other banks. Within a short time, loans multiplied and amounts rose into the hundreds of millions of dollars, far outstripping the eurobond market, which was also gathering pace at the time.
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> It has been questioned whether Zombanakis was the true inventor of the syndicated euroloan. Some have said he simply claimed the title for himself (he once described himself as a man with no shame). Records show that other bankers were thinking along similar lines, and that these types of loans had been made a few years before. But they were isolated examples: it was not until Zombanakis formalised the syndicate and the Libor formula that a true euroloan industry can be said to have emerged.
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> By the 1980s, Zombanakis had left the banking industry with a feeling of disgust. The debt crisis in developing countries presented him with a new role: advising sovereign borrowers on how to manage their debts. He also specialised in “difficult” countries such as Iran, Saudi Arabia and Japan, which he had visited earlier in his career. He made influential friends, usually the finance minister or governor of the central bank.
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> His lack of obvious political affiliation made him a useful source of advice in his home country during the political turbulence of the 1970s and 1980s. He was close to several prime ministers, including fellow Cretan Konstantinos Mitsotakis and Konstantinos Karamanlis. He also advised the military junta, attracting criticism and defending himself by saying he was trying to help Greece maintain access to international finance. It was rumoured that he was canvassed for both the jobs of prime minister and governor of the central bank at the time.
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> Zombanakis had a rich personal life. In 1955 he married Pia Alexakou, a banking colleague who later became an international expert on Byzantine art, and who died suddenly in 2007. They had two sons, Andreas and Costi. 
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> David Lascelles
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