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Relationship banking: DangDang dishes the dirt

Some disgruntled clients grumble darkly about their underwriters. Some vow never to work with them again. And some write a song about their incompetence, call them "motherfuckers", and distribute it on the Chinese internet.

Sadly for Morgan Stanley and Credit Suisse, Chinese book retailer DangDang’s chief executive, Li Guoqing, fell into the latter camp. The two banks had helped list DangDang on the New York Stock Exchange on December 9, raising $272 million. But according to Li’s posts (and poetry), the banks had pledged to raise far more than that (up to $900 million) when pitching for the mandate.

In January, he snapped and took to the Chinese blogging site Sina Weibo. "You fuckers knew first day of launch that valuation would be 2 billion, but you still priced USD 16 per share, which comes to 1.1 billion. My CFO was in panic mode, I held back a breath and silently cursed you motherfuckers," he posted. (Apparently it rhymes rather better in the original dialect).

But that wasn’t the end of it. The post had not named either bank, but swiftly two other bloggers, calling themselves Morgan Stanley woman A and Morgan Stanley woman B, wrote back with very personal attacks on Li, calling him "broken-gong brain", a "beggar", and stating that "if not for Yuyu [his wife] you would be left on the streets of Beijing as a piece of shit." One adds: "Go to Goldman Sachs."

Morgan Stanley itself has denied that either of these posters really works for the US bank but the damage is done: the lyrics have gone around the world and attracted thousands of comments. Morgan Stanley’s Asian ECM executive director, Alain Lam, has apologized and so, in a limited sense, has DangDang, but only with the caveat that the remarks were meant to "serve as a warning to entrepreneurs who will seek US listings in the future".

Morgan Stanley’s Lam has sent an internal script around for people who are questioned about the deal, defending its pricing and conduct. "Morgan Stanley continues to have an excellent relationship with the company," it says.

Yes. It really says that.