China cracking down on investment bankers - Will HK be next?

[SirNotAppearing]

https://www.bloomberg.com/news/articles/2024-09-12/china-detains-investment-bankers-takes-passports-in-graft-sweep?srnd=homepage-asia

Recently China's been cracking down heavily on investment bankers and capping their total comp earnings to 400,000 RMB. They are even clawing back some of their past bonuses/earnings from them.

Seems like it's getting more and more serious. I wonder how this will trickle down to Hong Kong?

"Trickle down" is an interesting way to describe it.

[mtkl]

"Trickle down" is an interesting way to describe it.

And not clear what will trickle down… the money and the bankers, or the rules?

[freeier]

But honestly, when we heard of bankers that creamed the public off, e.g. guys that pushed and sold mini-bond in hk/sgp.. and did get tonnes of bonus before those blew up... didn't we felt that they should be brought in to face the music ?

[AsianXpat0]

No love of investment bankers here, but what relation do they have to product sales, even leaving the complacent yield-grasping aside?

[freeier]

Someone along the chained created the product and they went on to pitch it to unsuitable investors..

[AsianXpat0]

Touché, I still have the outdated notion of investment bankers doing corporate advisory.

That still leaves us the problem where the product creators are in another country, and my hazy recollection was that in a first-to-default scenario, it ended up being the underwriter itself defaulting? Didn’t seem like something they genuinely anticipated, nor did the bank go unpunished for it.

So the guys who pushed and sold mini-bonds? Yeah I agree, but thought they were in consumer banking.

If we do go by product creators rather than distributors though, by that logic, maybe we should lynch the regulators who asked for AT1 securities…

Don’t get me wrong, happy to hate overpaid empty suits on general principles, just have to be fair here.

[freeier]

Touché, I still have the outdated notion of investment bankers doing corporate advisory.

That still leaves us the problem where the product creators are in another country, and my hazy recollection was that in a first-to-default scenario, it ended up being the underwriter itself defaulting? Didn’t seem like something they genuinely anticipated, nor did the bank go unpunished for it.

So the guys who pushed and sold mini-bonds? Yeah I agree, but thought they were in consumer banking.

If we do go by product creators rather than distributors though, by that logic, maybe we should lynch the regulators who asked for AT1 securities…

Don’t get me wrong, happy to hate overpaid empty suits on general principles, just have to be fair here.

the consumer banking guys were the lowest in the chain of predators.. they had to meet targets and claim their fee so they did it. Above them the product developer.. of course the back end of the note is complicated enough that NY guys are likely involved, but they need to localize it into retail notes, etc.. so chunks of local structurer/lawyers as well. The first to default is painful, but its actually not the killer. The killer are the assets backing the notes, which were all stuffed with MBO and MBS, which the bank dumped into the SPV because they were sitting in their balance sheet and dragging them. Those NY structurers were the one that creamed the most fees out.

[AsianXpat0]

Thank you for the reminder of the specifics of that case, which is that the collateral failed, and indeed the product manufacturers were at fault.

We are at risk of losing track of my larger point though, so maybe illustrating by way of an example of a different context might make it clearer. When members of a certain religion or culture are accused of creating problems, we are reminded that whatever the commonalities may be, it is racism to be talking about it, because the people at fault for specific incidents are individuals, rather than attribution for the fault to a general class or group.

In this case, private contracts with an employer are being overridden by the state, it could just be me, but I feel more sympathy with the category “investment bankers” here where they are having their employment agreements nullified, than feeling exultant about justice served because different individuals in the category may have committed moral wrongdoing two decades ago.

So I guess my feeling comes from puzzlement that people are often happy to rush to the defence of “protected categories” because the wrongdoings of individuals are not that of the groups, but when it comes to class warfare, that same logic suddenly doesn’t apply (the sins of the individual, are by assumption those of the group, and therefore that of every individual in that group unless proven otherwise). I hope you don’t think I’m singling you out in particular, it’s just something I noticed in general. In terms of general disgust at the people associated with the Lehman minibonds debacle, we are probably quite well aligned. So I suppose if any particular individuals from that case are having money taken away from them, in that narrow sense I might agree.