Comments on: You say princelings, I say elite corps of investment bankers http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/ Sun, 26 Oct 2014 17:29:51 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: BenWalsh http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-129 Wed, 23 May 2012 21:07:52 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-129 Agreed there are absolutely merchant banking attributes here – perhaps “investment banker” was too narrow a term but there’s no reason that term has to mean a pure agent per se or that a princeling has to be a principal. The princelings seem to be acting as agents at times, principals at others and sometimes both, much like GS, MS, et al before the crisis and Volcker. The line between agent and principal is blurred for princelings. And, at a level below and generation younger than the most prominent princelings, foreign banks are hiring princeling-lites for relationships/networks.

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By: EpicureanDeal http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-128 Wed, 23 May 2012 16:33:59 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-128 They look more like the old-style, now mostly defunct merchant bankers rather than investment bankers. Merchant bankers do all the things you mention, but they also retain a large role in such dealings as a principal, which is where they make most of their profits. Modern investment bankers who operate in these fields (rather than securitization and derivatives markets, where they do operate as principals) act primarily as agents. Being a principal, and hence a princeling, should be expected to be far more profitable to an individual than being an investment banker. If it were not, you would see foreign investment bankers hiring more princelings, because we would love to get ahold of their guanxi.

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By: OregonJon http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-127 Wed, 23 May 2012 15:10:04 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-127 Anyone who has done business in business in places where regulations are opaque understands the usefulness of princelings, or whatever you want to call them. In the United States the increasing amount of government regulation has seen an almost exponential rise in lobbyists who,for a fee,will plead your case with the powers that be. Many lobbyists are former elected officials and hence have longstanding ties with the government bureaucracy. In a very real sense you might call them princelings. Investment bankers perform similar functions.

In countries where power is more concentrated there are fewer “go to” folks to cut through the red tape. There is a fine line between a bribe and payment for service, but a line nonetheless. One way to think of this is that a bribe is payment for doing something illegal like accepting a higher bid or overlooking unsafe products or practices.

Payment for accelerating the process is something else. I once lived in the Philippines and was told that a local driver’s license was needed and the cost was 200 pesos. That seemed like a lot when the actual license fee was 20 pesos. In my righteous youth I said that I’d personally wait in line as I would not pay any bribes. The reply was that the line was about three days long and even then the clerk, seeing that I was a foreigner, would ask for something before issuance. Either way I was going to receive a local driver’s license. I paid the 200 pesos and went back to work. I received the issued license that afternoon.

Over a thirty year international career on several continents this scenario or a variation thereof was repeated multiple times at multiple levels. The rise of Chinese princelings seems a natural consequence of China’s engagement with the world. What would make China different from everywhere else in the world?

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By: MrRFox http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-126 Wed, 23 May 2012 11:39:13 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-126 “Greasing the wheel with bribes is now equated with M&A bankers?” (GRRR)

Apparently, and either the bribesters or the banksters ought to be insulted – but which one?

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By: GRRR http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-125 Wed, 23 May 2012 10:02:06 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-125 Greasing the wheel with bribes is now equated with M&A bankers?

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By: GRRR http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-124 Wed, 23 May 2012 10:02:01 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-124 Greasing the wheel with bribes is now equated with M&A bankers?

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By: MrRFox http://blogs.reuters.com/ben-walsh/2012/05/23/you-say-princelings-i-say-elite-corps-of-investment-bankers/#comment-122 Wed, 23 May 2012 06:11:20 +0000 http://blogs.reuters.com/ben-walsh/?p=353#comment-122 “Western banks and companies looking to do business in China seek out princelings for the same reasons.” (BW)

Kinda the same reasons that got WalMart so much ink about its Mexico opreation, but really – it’s more like what Bofors and Lockheed got into, isn’t it? But hey – if there’s money in it, how could it be wrong?

Corrupt, klepto-capitalism works just fine for the bribe payers and the bribe takers – it’s everybody else who takes it up the back-side, but who gives a flying …. about them?

Good show, Benny. You got what it takes to make it big on The Street.

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