Holy Roman Empire-Chapter 1026 - 40, The Scam of the Century
Chapter 1026: Chapter 40, The Scam of the Century
As the economy continued to grow, a distinct financial street gradually formed around the Vienna Stock Exchange.
Here, one-third of the Holy Roman Empire’s banks and forty-five percent of the securities companies converged, not to mention the multitude of other financial firms.
It could be said that any financial enterprise with a modicum of strength had established a base here. The most powerful ones even monopolized entire buildings.
Of course, the strong were always in the minority anywhere. To own an office building in the fiercely competitive and costly financial district was not something an ordinary enterprise could achieve, even through leasing.
It wasn’t just a matter of money. There were plenty of rich folks around; everyone was familiar with each other’s background, and any attempt to show off could backfire embarrassingly.
With an anxious heart, Ababernel strode into the Newfoundland Building, heading to his workplace at Appel Commercial Bank.
...
As an old-fashioned commercial bank in the Germany Region, Appel Commercial Bank had failed to keep up with the times due to mismanagement, and instead, was increasingly struggling under the pressure of competitors.
In particular, during the stock market crash a year prior, Appel Commercial Bank made a flawed judgment, resulting in a considerable amount of bad debt on their books.
The teetering-on-bankruptcy Appel Commercial Bank quietly changed hands. As a new employee joining after the bank changed owners, Ababernel, who had just started his career, received “special attention” from his superiors from the beginning.
However, Ababernel now had no desire for this kind of “special attention.” The thought of offering a loan to the Spanish Government was thrilling.
It wasn’t that Ababernel was being unduly humble; it was simply that the Appel Commercial Bank’s strength was limited. A “seventy million” Divine Shield loan would bleed the bank dry and still not come close to half the amount.
Draining funds was clearly out of the question, and the regulatory agencies of the Vienna Government were no fools. Such foolish acts, prone to trigger a bank run, would certainly invite interference.
After personally outlining the risks to his superior, not only did it have no effect, but the onerous task fell squarely on Ababernel’s shoulders.
According to his superior’s words, “The brave live and the timid starve.” If one bank couldn’t handle it, then find others to collaborate with.
Ababernel had originally thought that finding partners meant forming a consortium with a few peer banks. If that were the case, although the risks would be greater, the costs could be shared among multiple banks, making it feasible.
Soon enough, Ababernel realized that was not the case; the banking consortium for the loan to Spain did not include Appel Commercial Bank’s name, yet the loan still existed.
This meant that the seventy million Divine Shield commercial loan they were now undertaking was not the same loan agreed upon between the Vienna Government and the Spaniards.
A high-risk international loan without government involvement and without the participation of strong mainstream banks—Ababernel seriously doubted this was a joke.
Reality told him it was real. The loan did exist, and the partners of Appel Commercial Bank were not renowned big banks, but rather some small loan companies he’d never heard of.
These shady guys, could they really muster so much money? Ababernel highly doubted it, suspecting his superior had been cheated.
…
“Ababernel, have you signed the contract with the Spaniards?”
Having just walked in the door without even catching his breath, Ababernel was greeted by his superior’s question.
Such an important commercial loan was entrusted to a newcomer like him, which was quite dizzying.
According to the staff within the bank, Ababernel was the illegitimate son of the current president and owner. Otherwise, such a lucrative business deal would never be his turn.
If not for the significant difference in appearance and the certainty of his own paternity, Ababernel would have harbored doubts.
“No, not yet, Mr. Adler. The Spaniards have proposed new conditions, they demand that in the first week after the contract is signed, the loan amount disbursed must not be less than ten percent.
Given the gravity of the matter, I did not dare to make a decision on my own. So I’ve scheduled another negotiation with the Spaniards about this issue for tomorrow afternoon.”
Despite his doubts, Ababernel held great respect for the man who discovered him. Even if he suspected that this loan might have been approved by Adler in some moment of madness, Ababernel did not persist in opposition.
Perhaps there were unseen benefits involved; after all, playing with finance always involved dealings with various powers. Sometimes, for the sake of undercover interests, making a few loss-making deals was perfectly normal.
Adler’s brows furrowed slightly, but quickly smoothed out: “Hmm, well done. This kind of decision indeed isn’t suitable for you to make.
Tell the Spaniards that a one-week timeline for disbursing funds is too tight. Such a large loan has never been processed that quickly.
In order to reduce risks, we must avoid the Spanish Government misusing the loan; oversight is essential.
The bottom line is that the first disbursement cannot exceed 3 million Divine Shields, and thereafter, no more than 500 thousand Divine Shields should be disbursed weekly.
You handle the rest. Try to secure as much benefit for the bank as possible.”
Clearly, Adler’s heart was not as calm as he appeared, especially after hearing the Spaniards’ demand that one-tenth of the loan be disbursed in the first week—his heartbeat quickened.
However, Adler concealed it so well, and Ababernel respected him too much, that he did not perceive it in time.
“Mr. Adler, the Spaniards have already reached an agreement with the government and have obtained a 70 million Divine Shield commercial loan. Now if we continue…”
Ababernel didn’t finish his sentence before Adler interrupted: “Ababernel, you’re still too young.
Although the Philippine War has ended, there are still several hundred thousand rebels on the island waiting for the Spaniards to quell them; now with the outbreak of the Cuban rebellion and the possibility of turmoil in the Moroccan Area.
So many problems converging at once are clearly the result of international forces meddling. I don’t know if Spain can win the war, but I am certain that 70 million Divine Shields will not be enough.
If the Spanish Government weren’t truly in need of money, they wouldn’t have sought a loan from us. Although the risk is higher, the reward is also richly sufficient!
Moreover, we are merely leading the way; it’s those small loan companies that will actually be putting up the money. Even if there’s a problem with the loan, our loss will be limited.”
Ababernel felt there was an issue but couldn’t pinpoint where. Befuddled, he nodded out of habit.
Having sent Ababernel away, Adler let out a deep sigh, lamenting internally that “people aren’t what they used to be.”
At this moment, he had to be thankful that he hadn’t entrusted this business to the shrewd old hands at the bank. Even a young newbie fresh out of school could sense an issue; if it fell into the hands of a veteran, he might already be having coffee with the regulatory authorities.
Don’t doubt everyone’s enthusiasm for reporting. According to the Vienna Government’s regulations, the reward for successfully reporting a severe violation in a commercial loan is at least one tenth of the total loan amount.
Seven million Divine Shields is enough to drive anyone mad. Considering that Appel Commercial Bank isn’t even worth seven million, who could pass up the chance of instant wealth?
Of course, Adler was prepared. Even if someone reported him, at worst, he’d simply forgo the loan, and keeping himself out of trouble wouldn’t be an issue.
The loan was indeed irregular, but the irregularity lay not with Appel Commercial Bank, but with the small loan companies behind it.
Since there was no overt connection between the two parties, even if problems did arise, Adler could only be suspected, not convicted. The bank wasn’t the police; it wasn’t obligated to trace the origins of investors’ funds.
Picking up the handset, he dialed the number. Mr. Adler spoke indifferently, “The Spaniards seem to have sensed something, so you must speed things up now.
“I’ll sign the contract with the Spaniards as soon as possible, and if the momentum isn’t right, then…”
Before Mr. Adler could finish his sentence, the person on the other end interrupted, “Don’t worry, Adler. I’m not a fool, the Vienna Government’s laws don’t stipulate that investment companies can’t raise funds overseas.
Even if the regulatory authorities find out, they can’t convict us. This matter won’t implicate you, as long as the Spanish Government doesn’t breach the contract, nothing will be exposed.
The Spaniards have just secured a loan of seventy million Divine Shields, and with our loan added to that, even if the Spanish Government loves to squander, they won’t go bankrupt anytime soon.
As long as we control the amount of the loan issued each time, even if the Spaniards discover our purpose, they will pretend to know nothing.
Help us pull off this one, and the Appel Commercial Bank will be yours. Whether you want to take the money and run or continue to operate, that is up to you.
Fortune favors the bold, you’re not afraid to take this little risk, are you?”
…
After ending the call, Revilla didn’t feel at ease. For this grand plan, he had paid a hefty price.
He had not only expended a great deal of goodwill, leveraging every relationship he could, but he had even gambled his entire fortune and his life.
Revilla didn’t want to take risks, but the losses from the previous stock market crash were so severe that he had incurred a massive external debt.
The capital market is cruel; there are no friends when it comes to interests. If he couldn’t repay the debts, the first to send him to the gallows would be his business friends.
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Revilla had also talked his creditors’ ears off, just to convince them. In fact, it wasn’t exactly convincing. To recover the debt, they had to let Revilla prosper first.
But going bankrupt is easy, getting rich is hard. The methods to get rich quickly are written in the penal code, and Revilla could only choose one to implement.
After much deliberation, Revilla decided to “cheat.” It was a skill passed down through generations, the one he was most adept at and best at.
With his previous connections and the help of his creditors, Revilla quickly found a group of like-minded people.
Not only did he set up shell investment companies and micro-loan firms, but he even acquired a near-bankrupt Appel Commercial Bank.
Originally, Revilla had planned to target the Russians, since the Tsarist Government was corrupt enough that bribing a few officials to cooperate could ensure the smooth execution of the plan.
Unfortunately, the Russians had a bad reputation, making it impossible to cheat investors with their name.
As the economic crisis continued, one European country after another went bankrupt, and Revilla was close to despair, when, luckily, the Spaniards came into the picture.
No question about it, he had to seize the opportunity!
According to the plan, first sign a lucrative contract with the Spanish Government, then use the contract to coax investors.
Sharing the benefits, there was no worry that the Spanish Government wouldn’t cooperate. After all, once a financial blow-up occurs, the lending financial companies would go bankrupt and flee.
No matter how high the loan interest was or how stringent the terms, once the creditors were gone, there would naturally be no need to repay.
…
Throughout April, the Vienna Government’s newspapers were dominated by two stories. One was the national military parade, and the other was the two “seventy million” Divine Shield loans.
The previously unheard-of Appel Commercial Bank had become a rising star in the banking sector of the Holy Roman Empire.
For a commercial bank, being famous is a good thing, as it means more business will come its way; but it is also troublesome, as it easily attracts the attention of regulatory authorities.
However, the loans from Appel Commercial Bank to the Spanish Government were cross-border and ostensibly legal, apart from a slightly higher interest rate.
This was the bank’s freedom to do business, they weren’t afraid of the risk, so there was nothing more to say.
As long as it was within the state-regulated loan-to-value ratio and didn’t cause cash flow strains or obvious credit risks, the regulatory authorities wouldn’t intervene.
Along with the bank, various investment firms were also gaining fame, and their salespeople were now holding investment seminars everywhere, contracts in hand.
As for the promise to Adler, saying that they would only raise funds overseas and not cause trouble domestically, that was a joke.
The promises of a swindler, if believable, would mean there were no deceptions in this world.
…
“The biggest money-making opportunity of the century is here!”
“Applaud if you understand.”
…
“Let’s do some calculations together. According to the contract signed with the Spanish Government, the handling fee is 12%, so:
7000 * (1-12%) = 6160 million
Calculated at an annual interest rate of 11.2% and over 30 years to repay the principal plus interest, we can deduct upfront:
67.48 * 12 = 877.24 million
6160 – 877.24 = 5282.76 million
This means that for the seventy million loan, the actual amount we need to pay is 5282.76 million, with the actual interest rate already at 16.6%.”
“Is that everything?”
“No, we can also dictate the direction of the loan’s use. For example, specify certain domestic goods, and as long as the price doesn’t exceed the market value, the Spanish Government can’t refuse.
This means we can earn a brokerage fee, take ten percent from civilian goods, thirty percent from weapons and ammunition, that’s not excessive, right?”
“Let’s just calculate 20% overall, 5286.76 * 0.2 = 1056.552 million, rounding down to drop the change, the brokerage fee is 1056 million.”
“At this point, for the seventy million Divine Shield loan, we’ve already recouped nearly 3/7 of it, raising our return on investment to…”
