chapter 3
Deals, horns and the crash
1 The 1989 Macquarie annual report highlighted the introduction of 24-hour foreign exchange trading, saying the move recognised the importance of global markets to Australia’s currency.
2 Macquarie’s 1986 annual report—which highlighted the firm now ranked within the top five on the volume of currency transactions it handled—also crowed about the move to 24-hour trading.
‘This has proved to be a major success and further strengthened the corporate trading base in the foreign exchange area,’ it said.
3 The 1987 annual report notes it was a US$S300 million multi-option aircraft financing facility for Australian Airlines.
4 https://www.rba.gov.au/statistics/cash-rate/; see statistical table F1.
5 1986 annual report.
6 https://www.bhp.com/about/our-history
7 The Melbourne Hilton Hotel was at the time by the city’s convention centre and close to the Melbourne Cricket Ground.
8 After a series of mergers and name changes, the law firm is now called Lavan.
11 Elders traced its roots to Scotsman Alexander Elder in 1839.
12 A cashbox refers to a vehicle in which funds are raised without a clearly stated purpose for those funds at the time of raising. The idea is that investors trust the managers to make great investments when they arise. Cashboxes were banned on the Australian Stock Exchange for a time.
13 https://www.grantsamuel.com.au/about-us/who-we-are/
14 https://www.afr.com/politics/a-month-that-skase-would-rather-forget-19891024-k3mye
15 Christopher Skase died in Majorca in 2001.
17 Black Monday crash: big spenders caught on borrowed time (theAustralian.com.au).
18 Net profit printed at A$13 million. Shareholders’ funds as at 31 March 1986 were A$63 million and total assets amounted to A$891 million.
19 Fred Hilmer joined the Macquarie board in 1990, while Helen Nugent became a non-executive director in 1999. Hilmer also chaired Australia’s landmark National Competition Policy Review Committee in the early 1990s, which triggered sweeping reforms in competition policy. He was CEO of media and newspaper giant John Fairfax Holdings for seven years until 2005 and went on to hold numerous academic posts, including vice-chancellor of the University of NSW, and board roles for major Australian-listed companies such as Westfield.
Nugent would also have an extensive corporate and board career after her time as a consultant. She served as director of strategy at major Australian bank Westpac for five years until 1999, and has held a string of board roles including at Origin Energy, Ausgrid, Veda, Australia Post and Sydney Airport ahead of chairing the National Disability Insurance Scheme until late 2021. She has also chaired two major government inquiries into the performing arts.
20 John Caldon had a long stint at Macquarie including in structured finance, as head of Macquarie Corporate Finance, joint chairman of Macquarie Underwriting and joint deputy managing director.
21 In 1987, the Reserve Bank would also permit Macquarie to move to a lower capital ratio of 6 per cent from 6.5 per cent. The 1988 report said at the time Macquarie remained ‘the only bank’ of the newly licensed crop to have been permitted to reduce its capital requirement.
22 The 1992 annual report refers to the business ethics document, released before the 1987 share market crash, which had also become part of induction and training for staff.
23 Clarke’s statement went on to say: ‘. . . consequently we have been, and will continue to be, particularly vigilant in order to protect the Bank against the inevitable shakeout when it comes.’
24 https://www.federalreservehistory.org/essays/stock-market-crash-of-1987
25 The 1987 annual report said Macquarie would continue to be ‘particularly vigilant’ to protect the bank against an ‘inevitable market shake out’.
26 https://www.federalreservehistory.org/essays/stock-market-crash-of-1929
27 https://www2.asx.com.au/about/asx-story
28 SEATS is short for the Stock Exchange Automated Trading System. That system would ultimately spell the end of the ‘chalkies’ who until then had been the front line of the stockbroking world, documenting what the operators were yelling about stock orders.
29 That represented a 25.8 per cent return on average shareholder’s funds and 2.2 per cent on average total assets.
30 The trust was called Macquarie Property Trust and it was formed to develop a portfolio of major property investments.
31 The stockbroking associate was called EL Davis & Co and then Macquarie Davis.
32 Mark Johnson led Corporate Services, Richard Sheppard Corporate Banking and David Adams Investment Services. Operations at this time was run by Julian Beaumont.
33 Seminars spanned cities including Sydney, Melbourne and Canberra.
34 ‘This year’s record balance of payments deficit, a higher inflation rate than our trading partners and rapidly increasing interest rates combined with strong movements in the Australian dollar are all causes for concern,’ the annual report also said.
