No support for $1bn demand to Ashley, says bank witness

AN EXPERT witness for Morgan Stanley has admitted that his analysis would not support a decision by the bank that hit Mike Ashley with a $1bn (£790m) cash demand.

In the latest phase of a High Court battle in which Morgan Stanley has been accused of “snobbery”, under cross-examination Bernard Minsky was asked if he had done work that would justify the sum. Mr Minsky told the court: “I have not done that, no.”

The bank issued the so-called margin call in relation to Mr Ashley’s trading of Hugo Boss shares in 2021.

The expert, joint international head at financial services company Marex Prime Services, said the numbers used to hit $1bn were much higher than he would use to limit the risk from adverse share price moves. Mr Ashley alleges Morgan Stanley was seeking to force him to close his positions in Hugo Boss shares, which the bank denies.

Morgan Stanley did not deal with Mr Ashley directly but demanded the $1bn from Saxo Bank, an intermediary, which passed on the cash call to the retail billionaire.

Mr Minsky said on a “crude” calculation, the amount of collateral needed would be based on a potential 200pc rise in the value of a company’s shares. By contrast, Morgan Stanley’s calculations were based on a theoretical 400pc rise in the value of Hugo Boss stock. He said: “We look for a gap between the amount of collateral that we have available and what the loss would be. Where we have such a gap, we require extra collateral. That’s the way I have done it and I have learned to do it.” Mr Ashley, who is claiming damages of £40m, alleges the figures used by Morgan Stanley were arbitrary and linked to personal animus against him. Mr Minsky was also questioned about allegations that Morgan Stanley bankers did not know if its 400pc stress test was appropriate. The former Goldman Sachs banker said: “If you have something within your tools of margining, I would want to understand how we’re doing it and why we’re doing it.” Expert evidence provided by Frasers argues that a 400pc rise in Hugo Boss’s share price was so improbable that it would likely only happen between once every 26,000 and 1.4 million years. Lawyers for Frasers have argued that Morgan Stanley’s $1bn cash call was far higher than typical for the banking industry, noting that HSBC only required $100m in collateral when it later took on responsibility for the trades. Morgan Stanley rejects the claim as contrived and without merit. The trial continues.