There's Profit In Gambling

Frank Monks, managing director of Nexgen Capital, has a long history of making serious money from risk-taking.


Since he first arrived in Trinity from St Vincent's CBS in Glasnevin, Monks realised he had an eye and appetite for risk-taking. So much so that when he left college he had cleaned the other occupants of the Junior Commons Room out of their inheritances and had the equivalent of two houses in his bank account from his poker sessions.

Despite all the nights playing poker, he left with a business studies degree in 1974 to train with chartered accountants Cooper and Kenny.

However, that was not the only way he differed from his contemporaries, and there were a series of incidents and run-ins with senior management such as the day he sent compounds from a lab he was auditing to be examined and a majority turned out to be below grade causing consternation.

Strangely, the next set turned out better and the principal of the lab became a director of the company. "It was my first inkling of the true independence of auditors," he says.

He soon decided that he could not handle the repetitive tasks and joined the merchant bank Hill Samuel which then had a very small presence in Dublin.

His talents were far more suited to merchant banking and he was quickly promoted and by the age of 31, he was the youngest board member of any bank in Ireland.

By the end of the decade it had grown to be the fourth largest bank in the State in balance sheet terms. However, Hill Samuel in the UK had been bought by TSB and the property crash there meant it really hit the skids. TSB decided to get rid of the Irish operation.

"I then had the task of planning my own and everyone else's redundancies, it was devastating."

Following several months of unemployment, he teamed up with the ex-head of international banking in AIB to establish KBL Bank in the IFSC. After three years he had done all he could and was then asked by Cardine Banca (at the time, the 8th largest bank in Italy, now owned by SanPaolo) to establish an international banking operation in the IFSC. The Italians were however, "charmingly autocratic" and he was delighted to move on. Along with Ravi Viswanathan and Luc Giraud, he set up Nexgen where Monks became managing director.

"This was really exciting and was a different form of investment banking. But returning to investment banking... was the best bit. It meant that deals were valued and there was serious personal reward for putting deals on the books."

At the start, the three pooled their personal assets but they soon attracted large investment from global players such as Temasek, owned by the Singapore government. The company began to write real risk in derivative contracts from equities to forex and more recently carbon credits.

Ironically, however, nearly all the company's business is in Europe, Japan and the US where pension funds and others clamour for the company's products. In contrast, Irish pension funds are still nervous of derivatives even where they are written only to eliminate downside risks rather than looking for more upside.

"It still puzzles me -- even winning solutions are turned down here because of a fear of the products. They are just not well understood."

However, Nexgen was going from strength to strength elsewhere. By 2004 the company had attracted some $200m in equity capital from serious global players and in November 2005 one shareholder bought out all the others. The company is now owned by French group Natixis. Total assets have exploded from $476m in 2003 to $1.1bn in 2005 to over $11bn in 2007 with profits substantially above €100m.

Unlike many other IFSC companies the recent turmoil has been kind to Nexgen, which was "turned the right way".

Despite the still obvious enthusiasm, Monks insists he is now in the twilight of his career and is finally getting the work-life balance right. "I may even improve my handicap," he says.