Much time has passed since Minos Zombanakis planted orchids in the municipality of Kalyves on the island of Crete until the foundation at Harvard University of a chair with his name to investigate how to make the banking world safer and stable and better serve to social needs. He is one of those men born in the interwar period -in 1926, being the second of seven brothers- who managed to transcend, on several occasions, the limitations that his humble origin and his lack of formation apparently presented. A self-made man, whose legacy for the economy does not come from academic study but from the very conception of structures that allowed a broader and connected financial system and cushion the proliferation of some disturbances.
His youth illustrates his ability to excel. During the Nazi occupation of Crete, aged 17, he fled the island on a boat and sailed under precarious conditions to Athens, where he entered the university and collaborated with the Allied side. This helped him to start speaking English and end up being an interpreter of the Bank of Greece. In this institution he had a brilliant escalation and, with only 26 years, he became the representative of the same in Washington. Despite being aware of not having sufficient academic credentials, he managed to be admitted to Harvard, where he obtained a master's degree in Public Administration. In the USA he made numerous contacts in New York, where his financial and diplomatic skills led him to the banking holding Manufacturers Hanover Corporation, an entity that would end up being absorbed in 1992 by Chemical, which, in turn, acquired Chase Manhattan Bank in 1996 that would end integrating JP Morgan Chase. Hanover Corporation sent the young Greek executive to Rome, as a representative for southern Europe, Africa and the Middle East. That is where he would make his main contacts and would build his international reputation.
During the sixties of the last century, Zombanakis noted the considerable difficulty of financing international projects, especially due to regulatory differences between the US and Europe. In 1969, the same year in which man reached the moon and in the midst of several social revolutions in the Western world, he devised a loan system in which several banks allied as a club to lend to other banks or to large corporations in any point of the globe at an interest rate that would vary depending on the monetary and macroeconomic conditions. It was the origin of London's interbank offer rate. The líbor (London Inter-Bank Offered Rate) of which is considered father and by which Zombanakis acquired international fame. However, the innovation went far beyond the (already important) creation of a reference price for interbank and corporate financing. It was the germ of loan syndication, the ability to finance large projects around the world. Contrary to what one might think, it was not a tool designed exclusively to provide funds to grow the banking coffers in rich countries. Zombanakis came up with this structure of loans and interest rates during a reception in London with the Central Bank of Iran and ended up signing a syndicated loan to save the battered finances of a country then under the Shah of Persia. They were the dawn of the great oil crisis and the system of syndicated loans helped to alleviate the enormous financing difficulties that generated the differences between countries with large reserves of oil and others with a tremendous dependence on it. Bank syndication also came at a time when Russia, China and several Arab countries wanted to conduct financial operations in dollars without having to go through the control and then strict US regulations. With the Zombanakis system, London grew as a global financial reference and Libbor as its interest rate.
The death of this banker on December 22 at 92 years coincides with the progressive agony of the interest rate of which is considered inventor. The líbor has been surrounded in recent years by scandals. Above all, after discovering that 12 international banks had manipulated their quotation, which has resulted in millions in fines and, at the same time, has given a final edge to this system. But his legacy remains. Among others, the chair of Harvard that now bears his name and currently occupied by Carmen Reinhart, one of the world's leading specialists in the analysis of causes and consequences of major financial crises.