Wednesday, August 21, 2013

Bankers As Friends, Not Fodder

Show me love, take me home to meet your ma ma.

Okay, this is the posting that probably gets me hung up by my thumbs and flayed alive. This article asserts that the only region in the world where bankers are still held in high esteem is in Asia, particularly Hong Kong, China and Singapore. The reasons given are as follows:

 1) A no-fault financial crisis – this time around, the local banks didn’t cause problems, and the local governments didn’t bail any of them out

    2) Bash someone else instead – there are plenty of other villains, namely real estate developers, milk product manufacturers, chemical plant operators etc.

    3) Bankers are heroes – they work hard, are well educated, well dressed, provide loans to people and make a good living.

    4) Bankers behave well at play… – they are not the party animals and are not as ostentatious as their Western counterparts

    5) …and at work – ditto

    6) Just another rich guy – see 2) above

    7) Bankers deserve it – see 3) through 5) above

    8) Greed is good – making money, and lots of it, is still a prime objective for much of East Asia’s population.

    9) A meeker media – The local media is not as free as in the West, and, with a few exceptions, is less focused on reporting on personalities.

My commentary on each of the above stated rationale:
    1) I generally agree, although those with memory back to the Asian financial crisis of 1997 and the Korean credit card crisis of 2003 may beg to differ. Still, banks back then were seen as weak, not evil.
    2) I agree. A variety of scum and short-sighted profiteers abound in Asia.
    3) I partially agree. Banks in Asia have done a great deal of good in the past two decades providing growth capital to businesses and individuals. However, there have also been hundreds of billions of dollars of investment products placed with the public over the past several years. If the market turns seriously sour and investors start losing heaps of money, the pitchforks are bound to come out in large numbers, as they did during Hong Kong’s Lehman Brothers Minibond crisis following 2008. Also, bankers who own portfolios of distressed assets are never known to be angels of mercy and charity.
    4) Huh? I think that the penchant for showy wealth is as prevalent in Asia as anywhere else.
    5) Ditto.
    6) I general agree. There is plenty of nouveau riche money that has been made through real estate, stock market investments, and business ownership. Much of that wealth is conspicuously displayed. Bankers are hardly alone in flaunting it.
    7) This is a tough call. Banker pay is a controversial topic globally, and Asia is no exception. Bankers are paid not simply according to the long hours that they put in and their intellectual horsepower, but to what profit numbers they can successfully put beside their name, as well as to the age-old principles of supply and demand. Simply speaking fluent Mandarin has never commanded the pay premium that it has over the past 10-15 years.
    8) I general agree, but with a heavy sigh. Money is still a powerful measure of success in Asia. I am reminded of a recent story whereby a man attended a presentation in China by private equity firm KKR. He brought his pre-teen son along and declared to the lad, “pay attention, this is the profession I want you to be in when you grow up.”
    9) This is only partially true, on a case by case basis. This is generally true in countries such as China and Singapore, as well as smaller countries where the media is heavily influenced by tycoons. However, in other countries such as Hong Kong, Korea and Taiwan, the local press can be as nasty as anywhere.
In short, I would agree that Asian banks are run more conservatively, more highly regulated and are less sophisticated than the large global investment banks. However, one cannot ignore that the relatively favorable economic climate in East Asia has muted the general public disgruntlement towards “fat cat” bankers. That charitable view may change in a heartbeat in the next crisis. I will be watching with keen interest to see how public sentiment turns going forward. That’s assuming that I’m not hanging from a rope soon after this article is posted.

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