Bargain-hunting clients of investment bankers only get what they pay for
To paraphrase America's founding fathers, most investment banks are created equal. The problem for deal-makers and investors around Asia is that many companies know this all too well.
Unlike the US and Europe, where companies tend to be loyal to one or two financial firms, many of Asia's corporate chiefs work on the assumption that all investment banks are as good as each other at handling deals.
As a result, mandates for big initial public offerings and mergers and acquisitions are usually awarded based on three main criteria: price, price and price.
In this unfettered free market for investment banking services, those who undercut their rivals have a good chance of winning the deal. Power point presentations, brand name and other gimmicks used to entice clients in mature markets are relegated to the Museum of Obsolete Banking Tools alongside the loud ties and hideous braces worn by Michael Douglas in Wall Street.
There are, of course, exceptions - the Hong Kong conglomerate Hutchison Whampoa, for example, selects banks on their willingness to provide loans rather than fees.
But in most countries, low fees are the rule. Since the financial crisis of 1997/98, initial public offerings in Asia excluding Japan have yielded the lowest rewards in the world for investment banks. According to the data research firm Dealogic, last year advisers on Asian IPOs received on average a paltry 3 per cent of the total funds raised, compared with 8 per cent in the US.
Let's all take a minute to gloat at highly-paid investment bankers from often arrogant firms struggling to make ends meet in Asia. Few hearts will bleed at the thought of Asia's cut-throat competition slashing the profits of banks that for years have used questionable practices to keep fees artificially high in the US and Europe.
But once the schadenfreude wears off, it is worth considering the implications of Asia's fee wasteland for its capital markets. xref See Europe stocks column at:
www.ft.com/europe xref The first issue could be termed "the Citigroup problem". The world's biggest financial institution has had a torrid time with the region's regulators, culminating in this week's accusation by Japan's watchdog that it misled "several customers". The specific allegation is that Citigroup told clients they could receive loans only if they bought certain bonds it was offering - a practice known as "tying" in antitrust speak.
I do not know the full facts but the slip up by Citigroup, which was punished with the closure of four branches, is symptomatic of a wider malaise. With fees for mainstream businesses so tight, investment banks have to make money wherever they can even if it involves cutting corners and breaking rules.
A senior investment banker recently told me his firm makes little money from underwriting bonds for companies and governments. However, for every dollar made on bond issues it makes four dollars in advising the same clients on derivatives and hedging products. With rewards like these, the temptation to "tie" products together can be all too difficult to resist.
The other consequence of Asia's low-fee environment is the risk that investors will get shortchanged by sloppy deal execution. It is natural for banks not to dole out the Rolls Royce treatment if they are getting paid a fraction of what they make in New York or London.
The most glaring example of this is last May's bizarre decision by Bank of China and Merrill Lynch, which undercut rivals to win the mandate for a landmark Hong Kong government bond, to "invite" HSBC to advise on the deal.
The two banks would never admit it but they must have felt the bond issue might have gone awry without HSBC's expertise and distribution muscle.
This year has been littered with IPOs falling on their first day, a sign that bankers misread the market or were unable to stand up to the company when it came to pricing. I am sure investors in the Chinese chipmaker SMIC, the transport group China Shipping and South Korea's flat screen television maker LG-Philips LCD would have been far happier had the companies spent a few dollars more on better advice. Arguing for better pay for bankers may sound obscene, but Asian investors and companies that are in favour of the status quo should realise they will get what the pay for.
投行便宜没好货
套用美国开国元老的话，大多数投资银行生来平等。而对亚洲各地的交易者及投资者而言，问题在于许多公司对这点了解得太清楚了。
在美国和欧洲，企业往往是只忠诚于一、两家金融公司。在亚洲则不同，那里许多企业首脑的假定是，所有投资银行在处理交易方面的水平都差不多。
结果，在大型首次公开发行(IPO)及并购业务上，委托给哪家银行往往取决于三个主要标准：价格、价格，还是价格。
在这个对投资银行业服务来说无拘无束的自由市场上，那些报价比对手更低的投资银行很有希望赢得交易。Powerpoint演示、品牌，以及在其它成熟市场上用来吸引客户的花招，与影片《华尔街》(Wall Street)中迈克尔?道格拉斯(Michael Douglas)招摇的领带、难看的西裤吊带一起，被归入“过时银行业道具博物馆”中。
当然，其中也有例外――比如香港的集团企业和记黄埔(Hutchison Whampoa)，它选择银行的依据是它们是否愿意提供贷款，而非费用的高低。
但在多数国家，低收费是金科玉律。自1997至1998年金融危机以来，在日本以外的亚洲国家中，企业首次公开发行为各投资银行带来的回报是全球最低的。据数据研究公司Dealogic的信息，去年，在亚洲为企业首次公开发行担任顾问的银行平均获得相当于筹资总额3%的微薄收入，相比而言，在美国这一比例是8%。
让我们幸灾乐祸一下，看看经常是狂妄自大的投资银行中薪酬丰厚的投资银行家，他们是如何竭力在亚洲达到收支相抵的。多年以来，在美国和欧洲，这些银行凭借令人生疑的操作手法，人为地将费用维持在高位，想到亚洲残酷的竞争正大幅削减这些银行的利润，几乎没人会感到心痛。
但一旦这种幸灾乐祸的情绪渐渐消退，就值得考虑，亚洲的收费荒原会对资本市场产生什么影响(参见
www.ft.com/europe欧洲股市专栏)。第一个问题可称为“花旗集团(Citigroup)问题”。这家全球最大的金融机构与亚洲地区的监管者已经闹得不可开交，本周这种关系达到顶峰：日本监管机构指控花旗误导“几家客户”。具体的指控是，花旗告诉客户，只有购买该银行正在发行的几种债券，他们才能获得贷款，这一行为用反垄断术语来说就是“搭售”(tying)。
我不清楚全部事实，但花旗集团遭到了四家分支被关闭的惩罚，这个不幸是一场更大范围内疲弱态势的征兆。由于主流业务的收费如此吃紧，因此投资银行不得不尽一切可能赚钱，哪怕涉及走捷径和违法行为。
一位资深投资银行家最近告诉我，他公司在企业和政府债券承销上几乎赚不了钱。但是，为同样的客户服务，在债券发行上如果赚1美元的话，那么提供衍生品和避险产品咨询能赚4美元。由于这样的回报，“搭售”产品的诱惑实在是难以抵御。
亚洲低费率环境的另一个后果是，投资银行可能会草率执行交易，而令投资者吃亏。对银行来说，如果它们仅得到在纽约或伦敦收入的一个零头，它们自然不会给予高规格的待遇。
最显著的一个例子发生在去年5月，当时中国银行(Bank of China)和美林(Merrill Lynch)做出怪异的决定，“邀请”汇丰银行(HSBC)担任此次交易的顾问。中行和美林通过低价竞争，获得了有里程碑意义的香港政府债券承销资格。
这两家银行绝不会承认，但它们一定已经体会到，如果没有汇丰银行的专业技能和分销力量，此次债券发行可能会出错。
今年以来，上市第一天就下跌的股票比比皆是，这是一个信号，表明投资银行家误判了市场，或者未能在定价上与公司对抗。我可以肯定，对中国芯片制造商中芯国际(SMIC)、运输集团中国中海集运(China Shipping)，以及韩国平板显示器电视制造商LG-Philips LCD来说，如果它们当初多花点钱，获得更好的顾问意见，那它们的投资者将会比现在高兴得多。赞成让银行家获得更高报酬，这听起来或许令人讨厌，但赞成维持现状的亚洲投资者和公司应该认识到，付出多少，收获多少。
