Posted on Wednesday 8 May 2013 by Ulster Business

Leeson

Nick Leeson has heard it all before. Rogue trader. Fraudster. Swindler. Crook. You name the unflattering moniker and Leeson has probably been labelled with it.

Speaking with him in Belfast, he acknowledges that there are good reasons behind the tags.

The former derivatives trader shot to fame – or perhaps notoriety – as the man whose unchecked risk-taking caused the collapse of Barings Bank in one of the biggest financial scandals of the late 20th century. He racked up losses of more than £800m after a series of risky trades went wrong, twice the capital held in reserve by Barings – one of the oldest financial institutions in England and personal bank to HM the Queen.

It was no small surprise then that when he chose to emerge from his second career on the after dinner speaking circuit it was to join a Belfast-based business specialising in debt mediation between struggling borrowers and their banks.

Leeson has become a Principal in the new Dublin office of GDP Partnership, a team of property, accountancy, legal and banking professionals led by business partners Conor Devine and James Gibbons, which aims to help clients avoid insolvency.

The first question that occurs to me is why anyone would want to trust Nick Leeson with their financial affairs?

"The negative perception of me is amongst a very small percentage of the population," he says.

"There are words that are often associated with me, rogue trader, disgraced banker and in some cases criminal and fraud. None of them have particularly good connotations. Since 1999 when I was released from prison it has been a slow process of reinventing myself and taking full responsibility for everything that happened. Admitting and accepting my shortcomings and hopefully helping people."

But Leeson says in joining GDP he provides an understanding of the mindset of a borrower who is out of their depth.

"I think I signify that we have huge empathy with the borrower who finds themselves in difficult times at the moment. I've lived in Ireland for ten years through the boom years and the gloom and have seen how banks have behaved and how they have dealt with people," he comments.

"If you're riddled with debt and have your head stuck in the sand with nobody to talk to, you're hiding things from your family and your workmates, ultimately it is going to win. So you've got to stop that spiral and stop it quickly, because it can get out of control. I'm living embodiment of that fact. I learned some hard lessons over the years and if I can short circuit some of those lessons for people, that's a huge positive," he adds.

GDP's co-founder Conor Devine, a chartered surveyor, says he had no issue taking on someone who is best known for risky financial dealings.

"From our perspective there is a lot of hysteria around Nick and what happened a long time ago. But once you get to meet Nick and scrape it all back you have a very articulate person who understands finance, who understands the global economy and the mistakes that have been made and continue to be made. He regularly talks at international conferences about risk so for a small company in Belfast to attract someone of Nick's calibre is great for us," he said.

"Life for me is all about perception and risk is when you don't know a lot about something. When I look at Nick and what he brings to the table I don't see any risk personally."

Started three years ago GDP aims to help its clients negotiate a way forward with their banks so that they can avoid insolvency and move on.

Conor says the debt consultancy, which doesn't operate on behalf of institutions, has made progress in Northern Ireland and banks are now willing to listen. Most recognise that their net return will be greatly reduced by appointing a fixed charge receiver to assets and can generate an increased return by entering a mediation process.

"Quite often we are faced with people who are overwhelmed by debt and unable to find a solution. The country won't move on until we deal with debt. People don't trust banks and banks don't trust the borrowers. We try to bring them together," he said.

"We have seen a huge shift in the attitudes of some of the local banks the past 12 months. The banks have had to move to this engagement position – they now know it is better to get the borrower to work with them," adds Conor.

"But I don't want to sound too confident. The banks are not very transparent and we need to move the process on a lot quicker because the quicker we deal with the problem the more prosperous an economy we'll live in."

Commenting on the increasing trend towards business people choosing to go bankrupt as a means of getting free from the stress of debt, Conor says it shouldn't have to be an option in most cases.

"Why should you (go bankrupt)? Ulster Bank are owned by RBS which is 82% owned by the taxpayer. They were bailed out. What we're saying is let's restructure the debt," he said.

"Governments and banks have restructured their debts in the last few years, so why is it unreasonable for a borrower to do the same? The answer is its not, however there is a process you have to enter into and that's what we do through our practice."

EMPOWERMENT

The idea of empowering people to present new ideas to their banks and take back control of their debts is something Nick Leeson says attracted him to join GDP.

"The reason that is important to me is that I found myself, obviously, in financial difficulty – maybe on a grander scale than most people, although there are some who are in difficulty on a grander scale than I was," he explains.

"But the thing that happened to me when I was in prison in Singapore is that I was diagnosed with cancer. I didn't know how to find a path forward. The doctors told me everything they needed to tell me and most of it flew over my head and didn't make an impression on my thought patterns, which wasn't healthy. By reading a book on colon cancer and gaining more knowledge I became part of the process, which was enlightening and made me feel I could ask questions and be part of my recuperation," he adds. "Banking, law and medicine are all fairly similar in that the general public don't know very much about them and we're very reliant on what we're told. That is a very dangerous situation, especially in the world of finance at the moment because there aren't that many experts out there."

Having lived in Galway for the past decade Leeson doesn't believe the banking community in Dublin will have any problem accepting him in his new role as a mediator.

"Strangely enough the negative perception of me is probably reduced in the banks rather than heightened. In this day and age for a bank to have preconceived ideas about me would be slightly disingenuous because they've been disgraced themselves. I don't think there are any bankers up on the parapet shouting about my appointment because we're bringing a solution," he said.

"One of the problems I see in the South is that after the crash many people thought they could keep hold of everything. There's never been any history of repossessions in Ireland. It is a slow process for them to accept there will be a bit of pain in the resolution."

Conor Devine says that the situation in the Republic is about 18 months behind the North in terms of attitudes towards more innovative mediated solutions. That is further complicated by new insolvency legislation and the huge influence of the National Asset Management Agency (NAMA).

"All we're asking from people like NAMA is to be fair and open and transparent with the borrower. They are a bank and they are supposed to be working with the borrowers. We're seeing in many cases the opposite of that, which is worrying," he comments.

One of the biggest issues Devine sees for the year ahead is zombie companies.

He defines "zombies" as trading business who, while still doing well in their core business, are having profits drained away from them by banks to pay for associated loans on property which the company's directors perhaps took out to develop land as a sideline during the property market boom.

He sites Patton Construction as a prime example of a firm which was trading relatively well but was pulled down by the sharp drop in the value of the property assets it had invested in.

"There is a huge issue at the moment with zombie companies, they are all over Northern Ireland. Those associated loans mean they can't invest, can't reinvigorate, can't grow," says Conor.

"It is like an illness nobody talks about. There are nine counties in Ulster, seven in Northern Ireland, and every county has tens if not hundreds of these zombie companies. There will come a time when those property loans will become unserviceable. It can all be solved by engagement and settlement but that means pain for the bank as well as the borrower."

 

 

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