00:02:10 · Aman Narain, Zubin Vandrevala
[00:02:10] S0: And the listing will be the biggest suit he ever wears. He told Rubenstein why a bank lists at all. Public companies are trusted more. Over the next hour, the scar that made him, the ladder he chose, and the machine he built while accumulating the empire he's chasing. Whether he's the next Elon and the case against, including the breach that's been in the headlines this month, or I should say two as we go to press. [00:02:39] S1: But, Aman, before we dive in, let's get the grown up bits out of the way. Right? This podcast is for information and entertainment purposes only. It's not advised. So if you rebuilt your balance sheet or your wardrobe, as Aman loves to do, because two black shirt podcasters were admiring a man's shoes, that... That's between you and your regulator. I'm Zubin Vandrevala, just back from London, and I think still in London time. [00:03:05] S0: I could imagine. I'm Aman Narain in Singapore where it's already tomorrow, and this is A2Z. [00:03:27] S1: Let's go back to the beginning, and and it isn't London. Right, Aman? [00:03:31] S0: It's Dolgo Prudny, 20 kilometers north of Moscow, a town built around one physics institute that fed the Soviet nuclear and space programs. Nikolay Storonsky is born there in the 07/21/1984. His father, born in Lviv, in Western Ukraine, is a physicist at the research arm of the state gas monopoly, and its general director from September... Oh, sorry, I should say December 2019. That was sort of confirmed from corporate registries.
00:03:31 · Aman Narain, Zubin Vandrevala
[00:03:31] S0: It's Dolgo Prudny, 20 kilometers north of Moscow, a town built around one physics institute that fed the Soviet nuclear and space programs. Nikolay Storonsky is born there in the 07/21/1984. His father, born in Lviv, in Western Ukraine, is a physicist at the research arm of the state gas monopoly, and its general director from September... Oh, sorry, I should say December 2019. That was sort of confirmed from corporate registries. [00:04:06] S1: You know, as you were talking about that, Aman took took us back to our childhood, the steel city that we were born in, which was also very, very similar. I can almost picture this town in in in our childhood. Well, anyway, a company town for physicists. [00:04:19] S0: I know what you guys have been up to at Gravy, but, you know, I I wish you the same market valuation. [00:04:25] S1: Of course. Of course. Of course. Well, a company town for physicists and a father inside the state's most important company, and the son's own summary in interview this month, in a socialist system that you can't really own anything and being told that you can't do something makes you wanna do it more. [00:04:44] S0: That's not a founder myth. [00:04:47] S1: No. And it's a physicist describing a pressure gradient. [00:04:51] S0: Yeah. Now let's put the dates against the child. He's seven when the prices rise, 245% in a single month, 14 when Russia defaults in August 1998, and the... And and and 6 rubles to the dollar becomes 20 within weeks. The private banks fall over, depositors queue for hours to be told that their money is frozen.
00:04:51 · Aman Narain, Zubin Vandrevala
[00:04:51] S0: Yeah. Now let's put the dates against the child. He's seven when the prices rise, 245% in a single month, 14 when Russia defaults in August 1998, and the... And and and 6 rubles to the dollar becomes 20 within weeks. The private banks fall over, depositors queue for hours to be told that their money is frozen. [00:05:16] S1: And here's where you do the thing, and I wonder on the record that I saw it coming. [00:05:21] S0: What thing? [00:05:23] S1: Well, the psychological leap. Right? The dossier calls it the hypothesis, not a finding. A boy watches two currency collapses destroy his neighbor's savings, and twenty years later, builds a bank that keeps deposits completely out of the lending system. [00:05:39] S0: And and I think the counter evidence underneath it, you don't need the childhood. You think about the derivatives trader in 2013 could see a three to 5% markup on retail FX and the price of that arbitrage. And and the tiny loan book wasn't just philosophy at first. It was the law. As an e money institution, Revolut couldn't lend customers deposits. The man has told us himself what taught him about risk, and it was in 1998. Then the education because it's the operating manual. [00:06:15] S1: So so SysTech from 2001, oral examinations on unseen problems at a chalkboard, sixty to seventy hours a week, up to a third of every intake goes within two years. You derive everything from first principles, rote learning as banned, and a second masters at the new economics school at the same time.
00:06:15 · Zubin Vandrevala, Aman Narain
[00:06:15] S1: So so SysTech from 2001, oral examinations on unseen problems at a chalkboard, sixty to seventy hours a week, up to a third of every intake goes within two years. You derive everything from first principles, rote learning as banned, and a second masters at the new economics school at the same time. [00:06:37] S0: And, you know, Zubin, it's still from what I... From friends of ours who are there, it's still his hiring rule. He... Then he told Rubenstein, he looks for three things. Raw brainpower first, then character, and then craft. [00:06:51] S1: Which which is the chalkboard exam with the salary attached. Right? [00:06:55] S0: Yeah. So so London then... And for once, the dates come from him. Lehman came to the university recruiting, an internship in the summer of two thousand and six, another in spring two thousand and seven, and then a full time job in equity derivatives when he graduated. [00:07:13] S1: Yeah. 25 Bank Street, Canary Wharf. Let's let's remember this address because we'll come back to this. Right? [00:07:20] S0: Well, the student of September 2008, the firm ceases to exist on a Monday morning. He has said the trading book could be down hundreds of millions of dollars in a day. His verdict, extremely risky.
00:07:20 · Aman Narain, Zubin Vandrevala
[00:07:20] S0: Well, the student of September 2008, the firm ceases to exist on a Monday morning. He has said the trading book could be down hundreds of millions of dollars in a day. His verdict, extremely risky. [00:07:35] S1: Hundreds of millions in a day. That's what? More than Monzo Horns in the whole last year gone before lunch. On one desk. Right. And the Monday itself, right, and as we were prepping for this, mentioned to Rubenstein, he remembers exactly. The collapse was announced on, I think, the Sunday night. He came in anyway. One of those 200 traders on the floor, every system locked down, nothing to trade. So what do these guys do? 200 of them all play the same computer game. Shooting down helicopters. [00:08:06] S0: Yeah. I'm not gonna say anything. Then Credit Suisse, one Cabot Square, same estate, until 2013. A different problem, he says, not the risk, the infighting. He resigned the moment his British passport came through, and Credit Suisse, as he points out, is also gone. [00:08:26] S1: Well, two employers, two extinctions. One lost a fortune because the markets closed, and the other turned on itself, I guess. [00:08:34] S0: And one conclusion, and here it is in his own words. What I really learned from this experience is that you shouldn't take a risk in complex things. Cut the psychology. His sentence beats my hypothesis.
00:08:34 · Aman Narain, Zubin Vandrevala
[00:08:34] S0: And one conclusion, and here it is in his own words. What I really learned from this experience is that you shouldn't take a risk in complex things. Cut the psychology. His sentence beats my hypothesis. [00:08:48] S1: Accept it, and it's a design rule, not a feeling. Right? So let's price what he built with it. His number one loan to deposit, 6%, which he volunteers himself. Right? A typical bank runs near a 100, and he says he's never gone past 10 to 20. [00:09:04] S0: The audited version is a bit more stark, Zubin. December 2025, £1,850,000,000 of loans against 50,200,000,000 of customer money. 3.7%. 50,000,000,000 is more than Monzo and Starling hold together, and that's against a loan book that is smaller than Monzo. [00:09:28] S1: You know, that's not a bank that's cautious about lending. Right? Like, that's a bank that has decided lending is somebody else's department. [00:09:36] S0: And and then the claim that deserves a raised eyebrow. Return on equity of 40 to 50% once excess capital is deducted. Double his best rivals, he he says. [00:09:49] S1: Contested. And and here's why. Right? Like, net profit over equity audited, you know, I think it's, what, £1,300,000,000 over 4,900,000,000, but what? 26.7%. Excellent, but not 45. And on the same arithmetic, Nubank is about 28 and a half. Right? He's he's double his rival only after he redefines his denomination.