In the arcane world of derivatives trading, banking has become a branch of applied mathematics. How do the managers cope? Rudi Bogni, of Swiss Bank Corporation, explains why he is going back to universityby Rudi Bogni / October 20, 1995 / Leave a comment
Published in October 1995 issue of Prospect Magazine
I am a 47-year-old banker-chief executive of Swiss Bank Corporation in London, to be precise-and I have just decided that I need to go back to university for two years to study mathematics. Some of my friends think I am mad, and perhaps they are right. But perhaps something strange has happened to banking too.
It is hard to imagine that there is anything really new in banking. The tools of the trade have been around and in use, pretty much unchanged, for hundreds of years. Yet within the span of my own career, the world of international finance has enjoyed a renaissance-a spurt of creativity in the 1970s and 1980s, when new techniques emerged which have transformed the conduct of many banks and bankers. These techniques-collectively known as derivatives-have spawned a new jargon (would you know what to do with a Jellyroll, or an Alligator Spread?), huge new sources of profit, and mystifying new types of risk. They have even crept into the popular consciousness as a kind of sorcerer’s apprentice-an all-purpose bogey for mythologising the modern City. Was it the power of these strange new instruments which allowed a 28-year-old trader in Singapore to bring down a 200-year-old banking dynasty?