“CSFB is just like Laurel and Hardy,” says one banker. “It’s gotten itself into another fine mess.” Following hard on the heels of its problems in Japan, Sweden, the UK, India and the US, it’s now in trouble with the Chinese. This time it’s nothing to do with the regulators, but a diplomatic faux pas, and an expensive one at that.
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Does a career in slapstick comedy beckon for CSFB’s executives? |
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One telephone call was all it took for CSFB to find out that it had been dumped from two upcoming IPOs of state-owned companies – China Unicom’s $1.8 billion share issue and China Aluminium’s $1 billion offering.
Rival bankers believe, as does CSFB itself, that it won’t be invited to play with the Chinese for some time to come.
It all went horribly wrong when CSFB decided to get involved with a roadshow around Europe for Taiwan’s ministry of finance promoting investment in Taiwan. Unfortunately for CSFB, Yen Ching Chang, Taiwan’s minister of finance, went along for the ride. That angered the Chinese, who regarded the move as support for Taiwan’s independent status.
Other banks claim they would never have made such a basic mistake. “Look, the rules have always been there,” says one banker. “The Chinese tell us: ‘Don’t rub our noses in it and further Taiwan’s political independence agenda'”.
Another banker breathes a sigh of relief that his bank wasn’t caught out. “If the Chinese are going to whack someone, it’s better for them to get a Swiss bank than an American one. And on the basis of this I’m surprised they didn’t slap CLSA.”
The Asian securities arm of Crédit Lyonnais made the mistake on its website of promoting Yen to the position of minister of finance for the People’s Republic of China. The site was shut down for a couple of hours, reappearing with Yen’s proper title back in place,
CSFB is still in a state of shock and confusion at its harsh treatment over the matter. After all, when Yen was invited to take part in an Asian investment conference held in Hong Kong in March, his visa was approved at the highest levels. Also, according to one source, Yen is visiting the People’s Republic later this month to meet his counterpart, minister of finance Xiang Huaicheng, for off-the-record talks.
CSFB for now just wants the issue to settle down so it can go about rebuilding its bridges with China. But as one banker says: “Unfortunately a load of right-wing Americans have hopped onto the bandwagon and started slating China. CSFB needs that like a hole in the head.”
But it’s not all bad news for CSFB. A couple of days after losing the deals in the People’s Republic, CSFB managed to land a $2 billion restructuring mandate for Fubon Insurance Company – Taiwan’s largest non-life insurer.
