With the steady growth of the economy, a unique financial district gradually took shape around the Vienna Stock Exchange Center. Here gathered one-third of all the banks in the Holy Roman Empire and forty-five percent of its securities firms, while other financial companies were as numerous as stars in the sky. It could be said that any financial institution with even a shred of strength had set up an office here. The truly powerful ones even occupied entire buildings of their own. Of course, such powerful institutions were few and far between. Owning a building in this district where every inch of land was worth its weight in gold, even leasing one, was something only a handful of companies could afford. And it wasn’t just about money. There were plenty of rich people here, and everyone knew everyone else’s background. Pretending to be something you weren’t would only make you look like a fool. Carrying that thought in mind, Abarbanel quickened his pace and stepped into the Newfoundland Building, heading toward the offices of Appel Commercial Bank, where he worked. As an old-fashioned commercial bank based in the German region, Appel Commercial Bank had failed to keep up with the times. Poor management and fierce competition had driven it further and further downhill. The disaster reached its peak a year ago when the stock market crash hit. Because of a misjudgment in its investments, Appel Commercial Bank found itself saddled with massive bad debts. On the brink of bankruptcy, the bank quietly changed hands. As one of the new employees brought in after the takeover, the freshly graduated Abarbanel had been “valued” by his superiors from the start. But right now, he wanted nothing to do with that so-called appreciation. The task before him, arranging a loan for the Spanish government, was enough to make his blood run cold. It wasn’t that Abarbanel lacked confidence, but Appel Commercial Bank simply didn’t have the strength for such a deal. A loan of seventy million guilders was far beyond its capacity and even if they emptied the bank’s vaults, they couldn’t raise half that amount. That was out of the question anyway. The Austrian government’s regulators weren’t idiots. Any move that might trigger a bank run would immediately draw their intervention. Abarbanel had personally tried to explain the risks to his superior, but instead of backing down, the man simply dumped the entire job on him. As his boss put it, “The bold get rich, the timid starve.” If one bank couldn’t handle it alone, then find partners and do it together. At first, Ababanel thought this meant forming a banking consortium with other institutions, a group loan. Risky, yes, but if multiple banks shared the burden, it might still be manageable. Soon, however, he discovered that wasn’t the case at all. The list of banks participating in the loan to Spain did not include Appel Commercial Bank, yet the loan itself still existed. That could only mean one thing: the seventy-million-guilder commercial loan they were handling was not the same one negotiated between the Austrian government and the Spanish. A high-risk international loan without government involvement or major banks taking part? Abarbanel couldn’t help but feel this was a joke. But reality said otherwise. The loan was real. And Appel Commercial Bank’s supposed “partners” weren’t reputable banks at all, but a handful of obscure lending firms no one had ever heard of. Could these shady people really come up with that much money? Abarbanel had serious doubts. More and more, he suspected his boss had fallen for a scam. … “Abarbanel, have you signed the contract with the Spaniards yet?” The question came the moment he stepped through the door, before he could even catch his breath. A deal this important, handed to a newcomer like him, was absurd. Everyone in the bank had their own theory about it. They said Abarbanel must be the illegitimate son of the current president and owner. Otherwise, a lucrative deal like this would never have fallen into his hands. If it weren’t for the fact that he looked nothing like the man, and that he was certain of his own parentage, even Abarbanel might have started to wonder. “Not yet, Mr. Adler. The Spaniards have proposed new terms. They’re demanding that within the first week after signing, the released funds must not fall below ten percent of the total amount. This is a serious matter, and I didn’t dare make the decision on my own. I’ve arranged another meeting with them tomorrow afternoon to continue discussions.” Despite his doubts, Abarbanel still respected the man who had given him a chance. Even if he privately believed that Adler had completely lost his senses approving such a risky loan, he hadn’t openly objected. There were probably hidden interests involved. In finance, dealings with various powers were inevitable. Sometimes taking a loss was the price of gaining influence behind the scenes. Adler frowned slightly but soon relaxed and said, “Good work. You did the right thing. This isn’t something you should decide on your own. Tell the Spaniards that a one-week release schedule is far too fast. No major loan has ever been disbursed that quickly. To reduce risk, we must ensure that the Spanish government doesn’t misuse the funds. Oversight is essential. The first disbursement cannot exceed three million guilders, and each following week’s payment must not go beyond half a million. Handle the rest yourself. Do what you can to secure the best possible terms for the bank.” Although Adler sounded calm, he was anything but. The moment he heard that the Spaniards wanted ten percent of the loan released in the first week, his pulse had started to race. He hid it well, though, and Abarbanel, too respectful and inexperienced, failed to notice. “Mr. Adler, the Spaniards have already reached an agreement with the government and secured a commercial loan worth seventy million guilders. If we proceed with this deal as well, wouldn’t that…” Before he could finish, Adler interrupted, “Ababanel, you’re still too young. The war in the Philippines may be over, but there are still hundreds of thousands of rebels on the islands waiting for Spain to crush them. Now Cuba has erupted again, and Morocco might be next. All these problems flaring up at once clearly show that foreign powers are involved. I don’t know if Spain can win these wars, but one thing is certain: seventy million guilders will never be enough. If they weren’t truly desperate, the Spanish government wouldn’t be coming to us for more money. Yes, the risk is high, but the profit is worth it. And remember, we’re only leading the arrangement. The real funding comes from those small lending companies. Even if the loan fails, our own losses will be limited.” Something felt off, though he couldn’t quite say what. Dazed and uncertain, Abarbanel nodded out of habit. Once he sent the young man away, Adler let out a long sigh and muttered to himself, “People really aren’t what they used to be.” At least he could be thankful he hadn’t assigned the job to one of the old hands at the bank. If even a fresh graduate like Abarbanel could sense that something was wrong, an experienced banker would have caught on immediately. And if that had happened, Adler might already be sitting in an interrogation room at the regulatory bureau, sipping their coffee. There was no shortage of enthusiastic whistleblowers. Under Austria’s financial laws, anyone who successfully reported an illegal commercial loan could earn a reward of no less than ten percent of the total loan amount. Seven hundred thousand guilders was enough to drive anyone mad. After all, even the Appel Commercial Bank itself wasn’t worth that much. The chance to get rich overnight was not something anyone would ignore. Of course, Adler wasn’t unprepared. Even if someone reported them, he could simply walk away from the deal. The loan might fall apart, but he would make sure his own name stayed clean. Yes, the loan was technically illegal, but the real violations weren’t tied to Appel Commercial Bank. They rested squarely with the shadowy small lending firms behind it. Officially, there was no visible connection between the two sides. Even if an investigation began, Adler could only be accused of suspicion, not guilt. Banks weren’t the police. They had no obligation to trace where their investors’ money came from. He picked up the receiver and dialed a number. His tone was cold as he spoke, “The Spaniards seem to be getting suspicious. You need to speed things up. I’ll finalize the contract with them as soon as possible. If things start to turn—” Before Adler could finish, the voice on the other end interrupted him, “Relax, Adler. I’m not an idiot. There’s nothing in Austria’s laws that says an investment company can’t raise funds overseas. Even if the regulators notice, they can’t touch us. You won’t be implicated. As long as the Spanish government doesn’t default, no one will find out a single thing. They’ve just secured a loan worth seventy million guilders, and now with ours added on top, even the most extravagant government couldn’t go bankrupt overnight. As long as we control the release amounts carefully, even if the Spaniards realize what we’re up to, they’ll pretend they didn’t. Once this deal is done, Appel Commercial Bank will be yours. Whether you take the money and run or keep running the place is entirely up to you. Fortune favors the bold, Adler. Don’t tell me you’re too scared to take a little risk?” … After ending the call, Rivera didn’t feel any relief. He had paid a heavy price for this grand scheme. He had burned through favors, used every connection he could find, and even gambled his own life and fortune on it. It wasn’t that Rivera wanted to take such a risk, but the losses he suffered in the last stock market crash were devastating. He was buried under a mountain of foreign debt. The world of capital was cruel. In the face of profit, there were no friends. If he failed to repay what he owed, the first ones to sacrifice him would be those same “business partners.” It had taken Rivera endless persuasion to calm his creditors, though persuasion wasn’t quite the right word. To recover their money, they needed Rivera to get rich first. But going bankrupt was easy. Getting rich wasn’t. Every fast path to wealth was written somewhere in the criminal code, and Rivera had no choice but to pick one and act on it. After much consideration, he decided to go with “fraud.” It was, after all, the family trade—his most practiced and reliable skill. With his network of contacts and the help of his creditors, Rivera quickly gathered a group of like-minded partners. Together, they set up a string of shell investment firms and small loan companies, and even bought out a failing bank—the Appel Commercial Bank. Originally, Rivera had planned to work with the Russians. The Russian government was corrupt enough that a few bribes could smooth everything over, allowing the plan to unfold perfectly. Unfortunately, Russia’s reputation was so foul that no investor would bite once the name came up. As the economic crisis dragged on, one small European country after another went bankrupt. Rivera was on the verge of despair when, out of nowhere, the Spaniards appeared. There was no hesitation. He had to seize this chance. According to the plan, they would first sign a lucrative contract with the Spanish government, then use that contract to lure in investors. Shared profits ensured Spain’s cooperation. And if the whole thing blew up, the lending firms would simply declare bankruptcy and vanish overnight. No matter how outrageous the interest rates were or how harsh the terms, once the lenders disappeared, there would be no one left to repay. … Throughout the entire month of April, Austria’s newspapers were dominated by two stories. One was the grand National Day military parade, and the other was about two massive loans—each worth seventy million guilders. An obscure little bank called Appel Commercial Bank suddenly became a household name, rising overnight as the newest star in the financial world of the Holy Roman Empire. For a commercial bank, fame was a double-edged sword. On one hand, it meant more clients and more business opportunities. On the other, it also drew the attention of the regulators. Fortunately for the Appel Commercial Bank, its dealings with the Spanish government were cross-border transactions, and everything appeared perfectly legal on paper. The only questionable detail was that the interest rate was a little high. But that was within the realm of business freedom. If the bank itself was willing to take the risk, who could complain? As long as the loan amount stayed within the government’s leverage ratio limits and didn’t create liquidity problems or visible credit risks, the regulators had no reason to step in. Alongside the bank’s newfound fame came a wave of investment companies. Their salesmen were now running around holding signed contracts, hosting flashy investment briefings everywhere they went. As for the so-called promise to Adler that all financing would stay overseas and wouldn’t affect the domestic market, that was nothing but a joke. If the word of a con artist could be trusted, there would be no such thing as deception in this world. … “The greatest money-making opportunity of the century has arrived!” “Applause for those who understand what that means…” “Now, let’s do the math together. According to the contract signed with the Spanish government, the handling fee is twelve percent. So: 70 million × (1 - 0.12) = 61.6 million. With an annual interest rate of 11.2%, paid over 30 years, our first deduction for principal and interest would be: 67.48 × 12 = 8.7724 million. 61.6 - 8.7724 = 52.8276 million. That means for a 70-million loan, the actual amount we’re paying out is only 52.8276 million, which brings the effective interest rate up to 16.6%.” “Is that all?” “Of course not. We can also decide how the loan will be used. For example, we can specify that certain domestic companies must supply the goods. As long as the prices aren’t above market rates, the Spanish government can’t refuse. That means we earn another commission—say, ten percent on civilian goods and thirty percent on weapons and ammunition. That’s not unreasonable, right?” “Let’s average it to twenty percent. So, 52.8276 × 0.2 = about 10.56552 million. Round it off, and our commission fee is 10.56 million.” “At this point, out of the seventy million guilders loan, we’ve already recovered nearly thirty-seven percent. Our investment return rate has risen to…”
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
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