Key issue for success in investment banking


BY YAP LENG KUEN

WITH so much consolidation and relocation occurring among investment banks, a key issue for success is commitment and maintaining close relationship with clients. 

Ralph Parks

“The investment banking business in Asia is good but unfortunately, the industry itself had suffered from overcapacity globally,” said JP Morgan Asia Pacific chairman Ralph Parks. 

“We, as a firm, are very committed to the Asia Pacific. We are present in 15 countries and have 6,500 people. We have been here for 40 years. Partnership with many important clients is part of our core business.  

“For us, the region is important and we expect to be successful here. We had a very good year last year in Malaysia and continue to assist Malaysian investors to achieve their objectives,” he told StarBiz

Among the key factors for success are: 

  • Taking the right view towards the region, that is, a long-term view based on building and maintaining a deep understanding of clients and the markets; 

  • Having a major commitment in the region; 

  • Keeping and promoting local staff; that’s how one achieves the earlier two objectives.  

  • Being consistent in the way one delivers services from around the world in line with best practices worldwide.  

    This could be in the form of bringing industries into Malaysia to meet senior government officials, providing equity research to global investors and assisting them to access companies here, providing high quality information and delivering the world to Asian clients be they government, investors, corporates, public or private companies. 

    - Investment bankers thrive on economies that are robust and our intermediation of capital flows in the system, work in industrial consolidation as well as sales and trading to ensure smooth capital flows between investors and companies; all do better in robust economies. 

    - Asia ex Japan is the most rapidly growing set of economies that is driven totally by China, but is not limited to China. Malaysia is a good example of a sound economy that is growing well during the last year in contrast to, for example, Europe, which is faltering. We are seeing Germany, most of all, stumble and US growth has been pretty anaemic last year although it is improving,” Parks said.  

    Market liberalisation is viewed as an exciting event, a time for building further partnerships. “We view local investment banks as great partners and also as clients sometimes.  

    Kevin Wong

    “We have very close relationships and value them on a long-term basis. We believe that our roles are not mutually exclusive, in fact, it would be very expensive and time-consuming for them to build a global network.  

    “It would be a departure from our business model for us to try and become all things to all people locally and build an extensive retail branch system, for example, to offer services throughout the countryside.  

    “So why not team up and deliver the best to the local clients? We believe this is the best strategy and we have done it successfully and will continue that way. If they do better, Malaysia will do better, and so will we,” he said. 

    Parks said there was still a lot of corporate work for local and international houses. “To be successful, international houses should follow this model (of long-term commitment) in a co-operative fashion,'' he said. 

    However, this is not the kind of model that everyone is following, he noted. “One key issue to this local presence is knowing your markets by being there. We are not the fly-by-night type of investment bankers,'' added Kevin Wong, JP Morgan Malaysia managing director and senior country officer. 

    JP Morgan has a large presence in Malaysia with 85 staff members. “If you were to look around the region, you would be impressed that we have a large country presence outside our hubs in Tokyo, Hong Kong, Singapore and Sydney.  

    “We believe that we are in a good balance with the demand and needs of the market. We have the right set of professional skills and the right people to provide the services required.  

    “We are also hopeful that our clients appreciate our local presence and enjoy the benefits of our relationships and commitment to them,'' added Parks. 

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