Minos Zombanakis: Banker without borders
Minos Zombanakis was one of the great financial innovators of his age, leading the wave of change which transformed the banking world in the latter part of the 20th century. His major contribution was a new type of loan which enabled banks to club together across borders to lend large sums of money to corporations and countries, the so-called syndicated loan. Although this market proved controversial because of the huge size it eventually reached, it channeled finance to scores of new borrowers, particularly in the Third World, and provided a powerful stimulus to world economic growth.
James Wolfensohn, former president of the World Bank, once said of him: “Minos Zombanakis has experienced and contributed to the greatest changes in financial markets in history. He is a legend not only because of his financial skills but also, while Greek, he is one of those few universal figures who have shaped our international marketplace.”
Zombanakis achieved success through a rare combination of natural financial skill, good fortune and a self-confessed lack of modesty. Born the son of the mayor of Kalyves on Crete in 1926, he escaped to Athens during the Nazi occupation and attached himself to the Allies’ post-war aid effort, where he improved the English he had taught himself to speak. He found himself a job as an interpreter in the Bank of Greece, rising over time to more responsible positions and, eventually, becoming the Bank’s representative in Washington, DC, at the age of only 26. Aware of his lack of formal qualifications, he talked his way into Harvard, where he emerged with a master’s degree in public administration.
Using the banking contacts he made in New York, Zombanakis joined Manufacturers Hanover Trust, who posted him to Rome as their representative in Southeast Europe, Africa and the Middle East. Here he made pioneering visits to Saudi Arabia and Iran, where he opened up new loan markets and made lifelong contacts.
During this period Zombanakis was struck by the fact that there existed in Europe, particularly London, large pools of US dollars which had been driven out of New York by tough US banking regulations. He also noticed growing international demand for loans beyond the small, short-term amounts currently being offered by banks in what was still a restricted post-war banking market.
Zombanakis devised a means of matching supply and demand by putting together syndicates of banks to supply the dollars under a common contractual umbrella, and pricing the loans using a formula based on the banks’ cost of funds. He launched the first such loan – $80m for Iran – in 1969, and despite warnings that it was bound to fail because syndicate banks would drop out, it proved a success and was swiftly imitated by other banks. Within a short time, loans multiplied and amounts rose into the hundreds of millions of dollars.
The mechanism proved particularly useful during the 1970s oil crisis, when banks took in dollars from newly rich oil producers and recycled them by means of the syndicated loan market to newly poor oil consumers. This procedure dulled the impact of escalating oil prices and kept the global economy on a growth path. However, by this time, the loan market had grown into the trillions of dollars, triggering the 1980s Third World debt crisis, and causing Zombanakis to regret “this monster” that he had helped create.
Shortly afterward, Zombanakis left the banking industry to become an independent consultant advising indebted countries on rescheduling their loans. He also specialized in “difficult” countries such as Japan, Iran and Saudi Arabia, where he used his personal charm to win trust and make friends.
Zombanakis’s lack of obvious political affiliation made him a useful source of advice in Greece during the turbulent political decades of the 1970s and 1980s. He was close to several prime ministers, including fellow Cretan Constantinos Mitsotakis and Constantinos Karamanlis. He also advised the junta, attracting criticism, though defending himself by saying he was trying to help Greece maintain access to international finance. It was rumored that Zombanakis was canvassed for the jobs of both prime minister and governor of the central bank at the time.
Intellectual curiosity was part of Zombanakis’s character. He was behind several initiatives to explore international economics and finance, notably the Athens Seminar, a yearly gathering of high-level personalities from the worlds of academia, politics, banking and government. In 2010 he founded a banking chair at Harvard to explore ways to make banking safer and better adjusted to serving social needs.
Though not outwardly religious, he was a believer in “justice and fairness,” and he took a strong interest in the Orthodox Church, to which he also gave financial advice. In 1995, he became an exarch and accompanied Patriarch Vartholomaios on his historic visit to the Vatican which ended a schism that had lasted 1,000 years.
Zombanakis had a rich personal life. In 1955 he married Pia Alexakou, a banking colleague who later became an international expert on Byzantine art. She bore him two sons, Andreas and Costi, but died suddenly in 2007. In his later years, Zombanakis built himself a villa overlooking Kalyves and the orchards that he had helped plant as a boy. He is survived by his two sons.
David Lascelles is a leading international writer on financial affairs. A former banking editor and New York correspondent for the Financial Times, he is the author of “The Story of Minos Zombanakis: Banking Without Borders” (2011).
