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Extraordinary items from March 1998

Overdrawn at the joke bank

It appears that the Asian financial crisis has sparked a rash of secondary bank failures. A correspondent e-mails us:

Origami Bank has folded.

Bonzai Bank is cutting back on its branch network.

Sumo Bank has gone belly-up.

Kamikaze Bank has taken a nosedive.

There’s something fishy going on at Sushi Bank.

Staff at Karate Bank have been given the chop.

and, to cap it all, Shitsu Bank has called in the retrievers …

How to shunt a market flotation

You have to feel sorry for Robert Holden, finance director of London & Continental Railways – the company that’s in charge of building the #6bn Channel tunnel rail link and which was awarded the loss-making Eurostar service to help finance the project. Back in January, before the recent storm broke, we asked LCR’s press office if we might have an interview with the numbers man. (That’s him pictured, above left, beside Sir Derek “Mr Trainset” Hornby.) “Sorry,” we were told. “He is far too busy preparing for our stockmarket flotation in a few months’ time.”

Forty-eight hours later, LCR wasn’t heading for a flotation, but for the first railway nationalisation since 1948 as John “Fat Controller” Prescott warned that he might take back those shiny new Eurostar trains.

With forecasting skills like this, no wonder LCR can’t work out how many passengers it will have in 2052.

What’s his lucky number? Two?

Former lottery regulator Peter Davis may have spent an uncomfortable four hours with national heritage secretary Chris Smith recently. But as our rummage through the picture archives reveals, the ex-Price Waterhouse partner, former deputy chairman of Harris Queensway and former FD of insurance brokers Sturge Holdings, was once much more self-assured in front of the cameras than he was in the recent media scrum as he resigned his Oflot post.

FD too late to save powerscreen

In January we looked at “performance-related stress” and how divisional managers fiddle the books just so they can meet their targets – and keep their jobs.

It seems to have hit the mark among a number of readers. One FD said that he had sent copies of the articles to several of his divisional FCs.

“That story was absolutely right,” he told us. “We do sometimes put too much pressure on people to perform.”

He added: “The cover was absolutely frightening!” You may recall the dark, sinister photograph and ominous headline, “This manager has committed a #12m fraud – and he hasn’t even stolen a penny”.

Sadly, it was published too late to save Powerscreen International, which has just had to report some #47m in “mispricing and accounting irregularities” at its Matbro subsidiary and the resignation of Matbro’s sales and marketing director.

Not doing it by the book – their own book

Which of the following sentences came from the KPMG/E&Y press release announcing that their merger is off, and which came from KPMG’s 1997 guide on how to pull off a successful merger?

(a) “The regulatory process … would have taken many months …”

(b) “… the transaction had taken longer than expected …”

(c) “… consideration of the corporate culture should ideally be carried out as part of the earliest stage of the transaction.”

(d) “… potentially considerable disruption to client service …”

(e) “The costs and resources required to merge the cultures of the two firms have made the proposed merger impractical.”

West may be best but east costs less

Our Insight article last month on the Asian crisis seems to have been nicely prescient. Contributor Sarah Perrin reported in “Holding back the tears” that the stockmarket and currency collapses helped make potential acquisitions out there look much more attractive to western buyers, who were being threatened with stiffer competition from the Far East as a result of the forex crunch.

“The southeast Asian cloud may have a silver lining after all,” she wrote.

Financial Director had been on readers’ desks barely a week before Rexam FD Michael Hartnall spent #58m buying a third of the equity and two-thirds of the debt in a Taiwanese competitor, Der Kwei. Days later, eastern stock exchanges were scoring rises of 10% to 15%. A silver lining indeed …

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