Nicholas Sossidis and Stephen Partridge-Hicks, the bankers who created the model for Structured Investment Vehicles (SIV) that later collapsed during the global financial crisis, are back.
Sossidis and Partridge-Hicks own First Global Trust Bank (FGTB) Plc, a London-based firm that was authorised to provide banking services a month ago after a three-year approval process, UK Companies House and Financial Conduct Authority records show. The new lender is funded by Gordian Knot Ltd., their firm that once managed billions of dollars through a SIV until that vehicle’s 2008 collapse, the documents show.
“FGTB is a simple, narrow wholesale bank,” the lender’s website says. “We will only accept deposits or investments from professional, wholesale investors. Our business model doesn’t cater for retail deposits or current accounts.”
Upstart finance firms are seeking to capitalise from turmoil at European lenders, which continue to struggle with the enduring fallout from the crisis and the raft of litigation, probes and new rules that have followed. The crash was exacerbated by the collapse of the $400 billion market for so-called SIVs, complex, unregulated investment vehicles that swooned when the US mortgage market
imploded and imposed losses on debt investors.
“Gordian Knot is composed of innovative guys,” said Joseph Mason, a finance professor at Louisiana State University in Baton Rouge. “They’re creative, they’re thinking about new ways to expand financial products. Some of those work over time, some of them don’t.”
This time around, the pair is operating through a regulated bank rather than the shadow banking system.
Sossidis, 60, and Partridge-Hicks, 58, set up FGTB in 2011 and began the process of applying for a banking license two years later, the documents show. The FCA and the Prudential Regulation Authority approved the firm on April 4 to sell wholesale banking products, or services that banks provide to large corporations rather than to individual consumers, according to the documents.
Robert Wigley, who helped lead European operations at Merrill Lynch & Co. until its crisis-era takeover by Bank of America Corp., is chairman of the venture. Wigley has served on the boards of several UK companies since exiting Merrill Lynch and is a non-executive director of the Qatar Financial Centre Authority. Angus MacLennan, once a senior executive at Fortis Bank NV before stepping down in 2009, is chief executive officer. MacLennan has held director roles with Vocalink Holdings and a UK subsidiary of Arab Banking Corp., according to his LinkedIn page.
First Global Trust’s website doesn’t provide details about the specific products or lending the bank will provide. MacLennan declined a request for an interview, saying it was too soon to discuss the venture. Sossidis and Partridge-Hicks didn’t respond to e-mailed requests for comment.
FGTB relies on Gordian Knot for its “day-to-day financial resources,” along with book-keeping and other services, the documents show. The London-based investment firm had lent the bank 873,000 pounds ($1.3 million) as of the end of April 2015 and agreed to provide up to $10
million in funds, according to the
While today Gordian Knot is just another finance firm in London’s Mayfair district, it was once at the heart of the credit crisis through its management of a SIV called Sigma Finance Corp. SIVs borrowed through short-term loans and used the proceeds to invest in longer-term assets, often securities tied to mortgages.
Sossidis and Partridge-Hicks created the first SIV while working at Citigroup Inc. in the late 1980s before going out on their own with Gordian Knot. The bankers named their firm after the legend that Alexander the Great used a sword to slice through an impossible knot after learning that whoever could undo it would be the next ruler of Asia.