Working with Ashley could hurt our reputation, bank tells court

A MORGAN STANLEY executive at the centre of a legal row with Mike Ashley has said he did not want to do business with the retail billionaire because of concerns it would damage the bank’s reputation.

Simon Smith denied taking a personal dislike to the Frasers Group owner but admitted he had “reputational and regulatory concerns” about working with him.

Mr Smith, Morgan Stanley’s global co-head of investment banking, was giving evidence to the High Court as part of a legal dispute between the bank and Mr Ashley’s Frasers. Frasers has sued Morgan Stanley alleging the bank unfairly tried to force the billionaire to abandon bets on Hugo Boss stock.

Morgan Stanley threatened to close out the trades unless Frasers provided nearly $1bn (£790m) in extra funds to cover the bet, a sum Mr Ashley claims was unreasonable and arbitrary. He believes the bank was trying to force him out because of a personal animosity towards him.

According to evidence presented to the High Court, Mr Smith told colleagues that Mr Ashley was a “working class boy” and claimed to have “five dimensions of dislike” towards him weeks before the margin call was made.

The global co-head of Morgan Stanley’s investment banking division warned that Mr Ashley would have “zero respect” for the way Morgan Stanley operates and would do things which make the bank “extremely sick”. He also shared concerns that Mr Ashley and his retail empire Frasers are known for being “hugely litigious”.

Mr Smith told the High Court: “If you spend your life in litigation, it’s not because you’re easy to deal with.”

The Morgan Stanley boss also claimed that Mr Ashley’s past relationships with rival investment banks, including Goldman Sachs and Bank of America, was a “pretty big red flag”.

He cited reports that Mr Ashley once challenged a top Merrill Lynch banker to settle £750,000 in outstanding legal fees through a game of spoof, where opponents must guess the number of coins hidden by players.

The banker claimed that the billionaire is of the “same ilk” to former Topshop owner Sir Philip Green and UK property tycoon Robert Tchenguiz, suggesting Morgan Stanley should not do business with him. Mr Smith insisted that he had “no personal animus” towards the Sports Direct founder and considered him trustworthy.

The case continues.