Nicholas Moore

If you run Australia's biggest home-grown investment bank, as Macquarie Group's Nick Moore has been doing since June 2008, you are a powerful man in so many ways.

You can make yourself rich: Moore took home close to $10 million last year and $30 million at the height of the boom.

You can make others poor: Macquarie shares have fallen from $100 at the height of the boom in 2007 to about $25 now.

You can make Australia a different place: by financing infrastructure that might not otherwise be built, such as Sydney's M2 motorway.

And you can make parking charges at Sydney Airport the highest in the world: at $52 for three hours and one minute.

You can also tell the head of the Australian Competition and Consumer Commission to take a running jump. In 2010, ABC's Four Corners revealed that Macquarie had taken hundreds of small businesses to court to enforce contracts that the ACCC regarded as oppressive and unfair. Graeme Samuel (himself a former Macquarie banker) rang Moore to ask the bank to behave more reasonably, but met a brick wall. "This is a source of great disappointment to us," Samuel lamented.

But best of all, when you run Australia's biggest home-grown investment bank, you can persuade the government to help in times of need.

Soon after the collapse of Lehman Brothers in October 2008, Moore hosted a dinner for Australia's financial services minister, Nick Sherry, at Macquarie Group's swish Sydney offices. As he and his fellow executives sipped on their chardonnay, European share markets were falling through the floor, panic was gripping the world banking system, and Macquarie's survival was hanging in the balance.

Five days later, Treasurer Wayne Swan announced an emergency funding guarantee for Australian banks, which ensured Macquarie stayed afloat and allowed the Millionaires' Factory to pocket several hundred million dollars in easy profit, by borrowing $17 billion of cheap AAA money and relending it at far higher rates.

Three weeks before that, Macquarie had flexed its lobbying muscle and nudged the Australian Securities and Investments Commission into banning short-selling on the Australian Stock Exchange, where Big Mac shares were under heavy bombardment.

Moore supplies the barest personal details to Who's Who and has avoided Wikipedia. He also steers clear of Twitter and Facebook. But we can tell you he's a typical investment banker in the Manhattan mould.

He swims, he runs, he competes at everything, especially in the matter of who makes most money. And he takes no prisoners.

A well-known Sydney financial journalist vividly recalls Moore putting a finger in his face at a Macquarie Bank lunch and telling him to "shut up".

"I found him really arrogant and superior," lawyer and writer Greg Barns told Good Weekend's Jane Cadzow in 2006. Another ex-colleague told The Power Index, "If you're doing something wrong or you're an idiot, he certainly lets you know".

But friend and foe agree he is "ridiculously smart" and has "a steel-trap mind". They also agree he was anointed to run the bank as far back as the 1990s. By the time he took over from Allan Moss in 2008, Moore's investment banking division was making 50% of Macquarie's profits.

Nevertheless, some believe he's the wrong man for the job: a brilliant deal maker, not a manager, and yesterday's hero, from an era that will never return.

It was Moore who perfected the so-called "Macquarie model," which a well-known ex-Macquarie banker described to The Power Index as "all about creating deals that produce fees, fees and more fees".

Moore's specialty was infrastructure deals, in which Macquarie would finance and/or purchase roads, railways, ports and power stations and sell them on to Mac-run satellite funds. Using this model, Macquarie collected multimillion-dollar fees for buying the assets, multimillion dollar fees for selling them to the satellites (at a profit), and multimillion-dollar fees for managing them over the next 25 years (on contracts that couldn't be broken). There were also performance fees if values went up, plus fees for advice.

In banking, they call this "clipping the ticket". But Macquarie's genius was to build the train to take punters for the ride.

Moore took full carriage of this business in 2001 and pushed the bank into bigger and bigger risks, ramping up gearing and grabbing super-cheap, short-term finance, which needed to be rolled over. For five years, the share price soared and Moore's team got rich. But then the wheels fell off: interest rates rose, returns fell; deals dried up; performance fees dropped off. And in some cases Macquarie had to pump money into the funds to keep them afloat.

Then the GFC arrived.

It was about here, just as disaster loomed, that Moore took over the top job from Moss. According to Macquarie, he was the "ideal successor ... a world-class leader with an outstanding track record" and a man of "remarkable vision, energy and acumen".

But he didn't see the coming train wreck, and he's been struggling to contain the damage ever since.

"I think he'd be under considerable self-imposed pressure," says a former colleague. "He's a very competitive guy and he's got a bit of a chip on his shoulder about the way Allan Moss has a halo over his head and he has been left to deal with all the shit. I think he's pretty angry about that."

But it is to Moore's credit that Macquarie hasn't gone bust, like its cheap imitators, Babcock & Brown, Allco, and Rubicon, which disappeared into a $20 billion black hole in early 2009.

"Nick's protected the bank through the GFC and done a lot of smart things to prevent it going down the gurgler," says Steve Johnson of Intelligent Investor, who once worked for Moore at Macquarie and is an admirer.

"Nick's not a dummy," says a less-sympathetic banker who knows him well. "He's kept it together in a really tough market."

According to Johnson, Moore did see the coming crash sooner than B&B and Allco. "Macquarie stopped doing the really risky, high-leverage deals and got its funding in place soon after he took over," he says.

It also survived because it had better risk-management procedures, a wider spread of businesses, and the government guarantee, which delivered a truckload of easy money.

Last year and next, the group will make almost $1 billion profit, yet no one maintains Moore is doing a fantastic job. Macquarie's return on capital is a paltry 8.7%, and it has slipped down the list of leading investment banks this year, trailing way behind UBS, Goldman Sachs, JP Morgan and Barclays in mergers and acquisitions. In several of the key rankings, it hasn't even made the top 10.

Moore has also used the GFC to go for growth, and so far, the bet hasn't come off. In the past two years it has bought two German private banks, a couple of US asset managers, a US energy trading business, and an energy advisory firm, but it has also punted heavily on aircraft leasing, derivatives trading and securities broking. As a result, staff numbers have risen massively, from 10,000 in 2007 — before the GFC — to 15,600 today.

"They've bought the wrong businesses, at the wrong time, in the wrong part of the world," says one Macquarie watcher, who believes the US economy is a basket case. "There are rumours of jobs cuts on the way, and lots of Macquarie CVs floating round the city," he adds.

"Nicholas always had to make it bigger and better, so it's not surprising he's tried to roll out the Mac model to the rest of the world," says the Australian Shareholders Association's CEO, Vas Kolesnikoff, who once worked for the group. "But it's not really worked. You only have to look at the share price to see that: it's now back to what it was 10 years ago."

Johnson still has faith and believes Macquarie got some bargains. But he agrees the good old days of minting money are gone for good.

Moore's big challenge is to get Macquarie growing again and find a new role for the bank. No one, investors included, is sure that he can.