Cavalier whose gambling paid off

MICHAEL Spencer was lunching at Le Caprice in London's West End when the waiter came over and said: 'You've got a call from the office.' Spencer recalls: 'I always switch my mobile off over lunch, so I thought it was unlikely to be good news. I picked up the phone and one of my colleagues informed me that the World Trade Centre had just been hit by an aeroplane.'

Financial broker ICAP, which Spencer set up 15 years ago and still runs, had 675 staff working high up in both towers.

'I asked if our guys were OK. He replied, 'I think so. We think it was just a small, twin-engined plane'.' The full scale of the disaster came through on the radio as Spencer's car crawled back from the West End to the City.

'When I finally got there, I ran up to the boardroom, where we have a big TV. What I I saw was surreal, horrible. We sat there that afternoon and tried to reach our colleagues on their mobile phones, but all the networks were jammed.

'We had 250 people in the second tower, on the 55th floor. The replays kept running on TV. 'I honestly thought that if we hadn't lost 100 people, it would be a miracle.'

But miracles do happen. All but one person made it out before the tower collapsed.

Spencer will not identify his colleague who died. 'She was married with twins, two-and-a-half-years-old. Tragically, she was in a conference room, high up in the building. She had no chance.'

In the second tower, security announcements urged workers to return to their desks. Sal Trani, ICAP's office chief, told staff to ignore it. 'He ordered everyone out and stayed there personally until they had all evacuated. He's a Vietnam vet and a very gutsy guy.' The decision saved many lives.

Spencer travelled to New York 10 days later with his wife and daughter to meet his staff and see the devastation. The September 11 attack came when ICAP was racing ahead. Wholesale broking - trading complex financial instruments for big institutions - had been virtually written off five years ago.

Several broking firms were heading for bankruptcy. There were too many of them and conventional wisdom said the trades, carried out by brokers on the phone, would all move online.

Spencer fought back. His Intercapital bought rivals, combined offices and emerged as the world's leading player - just in time for the financial turmoil of the last two years. These proved a boon for his business, as everyone from airlines to banks sought to insure themselves against wild swings in interest rates and fuel prices.

The company also began successfully moving simpler products on to electronic trading. The shares, tipped in our pages a year ago at 322p, are now 819p.

Astonishingly, the New York business has risen from the ashes. 'Rebuilding the business turned out to be much less daunting than we had feared,' he says. Bloomberg and HSBC lent the company office space. 'We are squatting in their premises. They have been incredibly generous.'

Within a month, the office's revenues were back to 60% of normal and they are now on budget. 'It's an incredible testament to what my colleagues have achieved,' he says.

He gives senior manager Steve McDermott, along with Trani, special praise. 'I've learned an enormous amount about our resilience. I think the lesson is don't panic, even if you are tempted to.'

Spencer has found himself in the thick of the action for other reasons during this turbulent year. He recently emerged as a decisive voice in the battle for Liffe, London's powerful derivatives market, where he holds 4.25% of the shares.

His decision to back the bid from Paris-based Euronext, over that from the London Stock Exchange, helped to doom the LSE's chances. 'The Stock Exchange mishandled their bid quite badly. The deal was theirs for the taking, but they didn't go out to charm Liffe and made a very low offer. They then said they might lower the offer even further. The irony is total. The biggest international exchange in the world doesn't know how to handle a takeover bid.'

He gives LSE chief executive Clara Furse 'six to 12 months to prove that she's learned from that blunder and not to blunder again'.

The Stock Exchange might have hoped for a patriotic vote, but Spencer says: 'I think it's done London no end of good that the City is not Anglocentric. British culture has many wonderful things about it, but believe you me there's a lot to be added by the Americans, the French, the Germans and the Swiss.'

He argues that it is the City's openness and internationalism that has made it Europe's dominant financial centre. Parisians gave their famous cold shoulder to foreigners for so long. 'They cut themselves out of the race and it's too late for them to change their mind.'

Meanwhile, German labour laws ruled out Frankfurt. 'Nobody in their right mind is going to put their whole resources there. ' Having laws like that is like setting off on a race with your shoelaces tied together.'

In a City increasingly dominated by Roundheads, Spencer may be one of the last Cavaliers. 'I got sacked from my first job at Simon & Coates because I was spending too much of my time gambling. I used to gamble on the markets and on backgammon.'

That was in the mid-1970s when Spencer arrived in the City fresh from a physics degree at Oxford. 'I used to play a lot at the Playboy Club and the Clermont Club with Victor Lowndes.

'The most I lost in one evening was about £10,000.' That was in 1970s money. 'I was not - to put it politely - a natural salary man. I got sacked more than once in my career.'

In 1986, he took his biggest gamble, quitting his job - at a stockbroking firm that no longer exists - to set up Intercapital with three partners and £50,000. They aimed to capitalise on the emerging business in 'swaps', a new and highly-complex financial product.

'I never knew it would get as big as it has done. It was a little Mickey Mouse market. If you did one trade every one or two days, you were doing pretty well.'

Last week, ICAP reported sixmonth profits that rose 36% to £44.6m pretax and predicted it will top £80m for the full year.

It has, ironically, become one of the City's more successful British-owned institutions. The company is valued at £820m, making Spencer, 46, personally worth more than £200m. In the intervening years, he has also become part-owner of City spread betting firm City Index and of Blue Square.

The shares are held through a private company, unconnected with ICAP. With shares in rival IG soaring, City Index will be worth a pretty penny when it floats.

He lives with Lorraine, his wife of 18 years, and their three children in west London. They also have a country house in Suffolk. Until last year, Spencer owned a typical 1980s-style executive toy - a sleek 45ft Sunseeker motor boat. What happened to it? 'It sank,' he said.

Next Wednesday, ICAP will give all its revenues for the day to charity. 'We started it in 1993 when the company was a lot smaller. We raised £280,000. Last year, we raised over £2m and, this time, I'm sure we'll raise more.'

Most of this year's money will go to help victims of the Trade Centre attack and to the St Bartholomew's Hospital Cancer Appeal.

'Effectively, the brokers are working for free because so much of their income depends on commissions. But the staff think it's wonderful. It makes them feel they're not just working for themselves.'

Interview by Brett Arends