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August 16, 2004
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The money box
The SCMP reports on Goldman Sachs' entrance into the Chinese investment banking business. Goldmans have entered a joint-venture with Chinese deal-maker Fang Fenglei. But nothing in China is that simple: Bankers are calling Goldman Sachs' US$62 million "donation" to help refund investors of bankrupt brokerage Hainan Securities its entry ticket into the domestic securities market. It is the most bizarre element in the agreement between Goldman and its mainland partners to form a joint-venture investment bank in the country as Hainan Securities will have no direct link to the venture. But, in agreeing to help rescue a domestic broker, Goldman has won goodwill and other concessions for its joint venture, Gao Hua Securities.In other words China's securities regulator is prepared to let foreign bankers into China so long as they "donate" (ie bail-out) other failed firms. Luckily the foreigners are not being forced to take the dud firms on: they just provide the cash to solve the mess for the Government. But as the article points out, the cash will most likely go to those with the best connections rather than the most deserving. It almost looks like a large-scale official bribe: you bail-out these guys and then we'll let you get a licence to bank in China. Call it business as usual, China-style. posted by Simon on 08.16.04 at 03:16 PM in the
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Comments:
Funny how that looks and smells like a bribe, doesn't it? A donation? Please. posted by: RP on 08.16.04 at 07:39 PM [permalink] |
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