Hong Kong Bank

"Gibbs’ scheme was good enough for the Hong Kong Bank (now HSBC), but since it didn’t operate in New Zealand special arrangements were required. In the end, Gibbs arranged that the Hong Kong Bank send a letter of credit to BNZ for $115 million which then endorsed Gibbs Securities’ bills of exchange. The BNZ endorsement turned the bills into first-rate paper. Gibbs then used Jarden and Co. (New Zealand’s largest broking firm) to sell the paper in the money markets. In a roundabout way, then, Gibbs and Farmer were effectively funding it themselves, putting no money in, but having gained the confidence of Wardley, the Hong Kong Bank and BNZ. The whole process had been made much easier by the financial deregulation that the government had passed over the previous months; Gibbs had been amongst the first to take advantage of the new freedoms."

"Gibbs handed over his A4 sheet of analysis, saying, ‘Look, James this is a good deal, we need funding, here are the facts.’ He then had to wait three months while Wardley’s analysts went to work on the figures to confirm Gibbs’ calculations. With that hurdle crossed, Gibbs hired Yonge as his investment banker for the takeover bid with a large success fee. The generous fee encouraged Yonge to pull all the strings necessary with his parent, the Hong Kong Bank, to lend the New Zealanders 100 per cent of the money required for the bid. Since Gibbs and Farmer were using a fresh company to make the bid, Tappenden Nominees, which had only $100 capital of its own, this wasn’t straightforward. Gibbs says:"