According to evidence presented to the High Court, Mr Ashley was branded a «working class boy». Paul Grover
The Morgan Stanley executive at the center of a legal dispute with Mike Ashley has said he doesn't want to do business with the retail billionaire over fears it would damage the bank's reputation.
Simon Smith denied having a personal grudge against the Frasers Group owner but admitted he had «reputational and regulatory concerns» about working with him.
Mr Smith, co-head of investment banking at Morgan Stanley, gave evidence in the High Court as part of a legal dispute between the bank and Mr Ashley's Frasers.
Frasers is suing Morgan Stanley, claiming the bank unfairly tried to force the billionaire to abandon his bets on Hugo Boss shares.
Morgan Stanley threatened to pull the plug on deals unless Frasers provided nearly $1 billion (£790 million) ) additional funds to cover the bet. This amount, according to Ashley, was unreasonable and arbitrary. He believes that the bank tried to kick him out because of personal animosity towards him.
Mr. Smith acknowledged that 'reputational and regulatory issues' on working with Mr Ashley Photo: Chris J. Ratcliffe/Bloomberg
According to evidence presented to the High Court, Mr Smith told colleagues that Mr Ashley was a «working class boy» and said he experienced there were «five things to dislike» about him in the weeks before the margin call was announced.
Morgan Stanley's global co-head of investment banking warned that Mr Ashley would have «zero respect» for the way Morgan Stanley operates and would do things that would make the bank «extremely sick».
He also raised concerns that Mr Ashley and his Frasers retail empire are known to be “extremely litigious”.
Mr Smith told the High Court: “If you spend your life in litigation, it is not because you are easy to deal with.”
The Morgan Stanley chief also said Mr. Ashley's past relationships with rival investment banks, including Goldman Sachs and Bank of America, were «pretty big red flags.»
He cited reports that Mr. n Ashley once challenged a leading Merrill Lynch banker to pay £750,000 in outstanding legal fees through a spoof game in which opponents must guess the number of coins hidden by players.
Frasers Group founder compared to British property tycoon Robert Tchenguiz Photo: Clara Malden
The banker said the billionaire is “the same kind” that both former Topshop owner Philip Green and British property tycoon Robert Tchenguiz are suggesting that Morgan Stanley not do business with him.
Telephone records show that other Morgan Stanley bankers wondered whether Mr. Smith disliked Mr. Ashley because the bank's chairman had not been given season tickets to Newcastle United, the football club formerly owned by Mr. Ashley.< /p>
However, Mr Smith insisted he had «no personal animosity» towards the Sports Direct founder and said any initial «irritability» was down to a lack of caution among his colleagues.
p>Mr Smith said he was “not an evil person” and rejected suggestions that his personal grudge against Mr Ashley was behind the decision to bar him from opening a prime brokerage account with Morgan Stanley.
He added: “I do not allow personal outbursts in my professional life.”
A deal official later denied comments describing Mr. Ashley as untrustworthy or dishonest, as the Morgan Stanley banker who initiated the deal said last week claim for payment of funds against Frasers.
Mr Smith told the High Court: «I don't think Mike Ashley is unreliable, I do think he is trustworthy.»
The banker denied its direct involvement in the affairs of Morgan Stanley. Ashley's Hugo Boss bet has a margin requirement of €220 million in May 2021.
Mr Smith, who has worked at Morgan Stanley for 25 years, was also asked why he had previously referred to Mr Ashley as a «worker» class.» a boy who happens to be a very talented retail salesman» who should be respected more than he is.
He told the High Court: «I come from a working class background, I respect people who come from a working class background.» roots and become a billionaire.»
The work continues.
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