The making of the Millionaires' Factory

Quiet, balding and bespectacled, Macquarie Bank chief executive Allan Moss is known in the Australian finance sector as something of a bumbling professor - tripping over phone wires, spilling cups of coffee and falling off desks.

"He's no Donald Trump," quips one senior executive. But what he lacks in social graces, Mr Moss more than makes up for in financial nous. Together with Nicholas Moore, the head of the bank's investment banking and infrastructure funds business, and David Clarke, the chairman who dabbles in wine-making on the side, Mr Moss has driven Macquarie's global expansion.

Macquarie started life 35 years ago as a tiny outpost of the London merchant bank, Hill Samuel. Today it is a $A14.5bn (£6bn) investment bank operating in 23 countries and contemplating a bold bid for the London Stock Exchange as part of its quest for true international recognition.

Profits have rocketed since Nicholas Moore devised the strategy of buying up assets around the world and spinning them off into separately listed trusts which, so far, have gone on to outperform the wider market. Macquarie makes its money by extracting substantial fees at every stage - advising on the sale of the assets to the trust, underwriting the subsequent float, continuing management of the trust and meeting performance targets.

Considered to be very smart, Mr Moore is also the archetypal aggressive investment banker, the poster-boy for Macquarie's "do anything for a bonus" entrepreneurial culture. But if Mr Moore is the chief deal-doer, his boss, Mr Moss, is the risk manager. "They're a necessary pair in the whole Macquarie model," an industry observer said.

After joining Hill Samuel in the late 1970s, Mr Moss founded the bank's risk management division in 1984. A year later, Hill Samuel's Australian division became a private trading bank and was renamed Macquarie, after one of Australia's earliest prioneers, Lachlan Macquarie. Mr Moss was promoted to chief executive in 1993, and Macquarie floated on the Australian stock exchange three years later.

Mr Moss has overseen 12 successive years of record profit growth. He prides himself on protecting Macquarie's brand and reputation, and investors count on him to ensure the bank does not overextend itself. Macquarie's aggressive expansion strategy began with investments in toll roads in Sydney in the late 1990s, and the creation of the Macquarie Infrastructure Group. The bank is now the proud parent of 13 listed funds covering infrastructure, tourism, property and airports, which enable it to spread its risk across a range of industries and use multiple balance sheets to fund big plays. Profit soared 67% to $A823m last year. Forty per cent of Macquarie's earnings come from outside Australia, and its empire stretches from shopping centres in China to a mortgage business in Milan and includes golf courses in the United States and airports in England.

But only three years ago, investors seemed to be tiring. The share price halved to less than $19 amid a spate of capital fundraisings and there were accusations that it had overpaid in its $A5.6bn acquisition of Sydney airport. Macquarie has clawed back its reputation, however. It newest fund, Macquarie Capital Alliance Group, raised $A1bn in March and the bank's share price has doubled in the last year to $64.40. Mr Moss, Mr Moore and other executives have been rewarded accordingly. Mr Moss earned $A18.5m last year, including a $A5.6m bonus, making him the highest paid businessman in Australia. Mr Moore, who earned $18.2m, is the country's second highest paid executive.

But chairman David Clarke, who refers to Macquarie as "a business where the assets go home every night", argues the payments are justifed to remain internationally competitive. Dubbed the Millionaires' Factory, the bank rewards performance with serious bonuses. Employees take a share of about 40% of profits, paid out over 10 years to keep staff.

Investors have also benefited. Since floating in 1996, the bank's share price has multiplied tenfold. As one Australian financial commentator put it: "That's a performance worth paying for."