Minos Zombanakis, banking innovator who created Libor, dies at 92

Minos Zombanakis, a Cretan who became an influential international banker, died at 92 Saturday following a long illness.

He was born in 1926 at Kalyves, a village near the Greek city of Chania, the second of a farmer’s seven children.

Zombanakis entered the University of Athens in 1943, during the German occupation, but never got his undergraduate degree.

He did, however, convince Harvard, in the late 1950s, to attend graduate courses and was awarded a Masters in Public Administration.

Now, Harvard’s Kennedy School of Government has an endowed Minos A. Zombanakis chair on the International Financial System.

Zombanakis worked for Manufacturers Hanover Trust bank from the late 1950s to the early 1970s as their representative in Rome, the Middle East and, later, in London, where he opened the bank’s office in 1968.

The Libor (London Interbank Offer Rate) came about as a way to lend money to cash-strapped companies and countries that wanted to avoid a more highly regulated U.S. market. Specifically, Zombanakis had arranged an $80 million loan to the cash-strapped Shah of Iran.

In another innovation, the loan charged variable rates.

But in 1976, Zombanakis was already warning, at a banking forum in London, that the banking system was increasingly being exposed to countries that “maybe would have no ability” to repay their huge external debts. This was both prescient and an understatement.

Zombanakis advised many Greek governments without pay and was often called upon by Constantine Karamanlis, Andreas Papandreou and his compatriot and friend Constantine Mitsotakis. Former World Bank president  James Wolfensohn has called him a “legend” of the international banking system.