Memories of the Black Monday crash and how soon we forgot about it

Twenty-five years ago this week, I became managing director of BZW (predecessor of Barclays Capital) in Hong Kong. The office was unstable after a summer of firings, and I had been dispatched from Tokyo to steady the ship. On Friday afternoon, a man called Reggie from Warburgs shouted ‘Heard the news from home?’ across the lobby: the ‘great hurricane’ was battering BZW’s Thames-side headquarters and reducing its trading desks to a chaos of sodden paper and broken glass. On Monday markets crashed everywhere and I flew overnight to London to find panic turning to stoic resignation as our firm, barely a year old, sustained losses of £70 million. The bonus-fuelled post-Big Bang paraphernalia of investment banking had proved utterly feeble against the forces of nature.

Told to report to the gum-chewing chief executive, Lord Camoys, I ventured a remark about ‘the next support level’ at which Hong Kong might rally. ‘In these conditions,’ he growled, ‘there are no support levels.’ But neither of us really knew anything about extremes of market behaviour — and what we learned that week was never passed to our successors who would be there for the dotcom bust and the crisis of 2008. Perhaps that’s because the unlearning process was so rapid: as soon as markets began to recover the following year, I wrote in Falling Eagle (2000), ‘we had almost forgotten the crash had ever happened’. At this distance I remember it vividly, however: it left me a cynic of market prediction, but an optimist for the resilience of human nature.

No setback

The collapse of the sale of 316 Royal Bank of Scotland branches to Santander of Spain is, on balance, a good thing. They have to be sold to someone by 2013, because that’s what Brussels decreed, but it will be better for the health of retail banking if they are sold to one of the newer competitors who promise to bring high-street diversity — Virgin Money and JC Flowers were first to declare an interest — rather than the Spanish giant that has already swallowed Abbey, Alliance & Leicester and Bradford & Bingley.