Indecent Proposal

My lady boss, a not-so-old filthy rich business executive, once offered me an indecent proposal. To make the story short, I agreed. We were all alone in the room when she told me, "What's your favorite position?" Without batting an eyelash, I replied, "CEO." End of contract.  :D 

P.S.

The illustration on the left side (click to enlarge) is totally another story of an indecent proposal. It is open-ended, so it's up to your wild imagination on how you will end the story. Enjoy reading!

Robust Philippine currency threatens business process outsourcing industry

Outsourcing to the Philippines is now said to be 30% more expensive than India and China, according to Business Processing Association of the Philippines (BPAP). But what is ironic is that the business process outsourcing (BPO) industry, which contributes much to the domestic economy, actually helped drive up the peso's value. The combination of an appreciating peso and a depreciating Indian rupee had provided India with a meaningful cost advantage. Ditto the steady Chinese yuan.

A survey of BPAP members on the impact of the strengthening peso revealed the following:

• about 46.7% of respondents said it had been more difficult to hit their respective revenue targets;
• about 40% of respondents said they had lost some business to other destinations;
• about 40% of respondents said they had canceled expansion plans.

Southeast Asia has become a preferred destination for global portfolio investors in which case their investment inflows result in increased demand for the local currency.

Aside from the BPO industry, exporters are also hit hard by a robust peso since they make less money in peso terms for every dollar they earn.

In a related development, some property experts are encouraging property developers to look beyond the BPO industry. Global consultancy firm Urban Land Institute, for one, advises property players to find new growth areas. One suggestion is to consider developing “middle office” hubs for financial institutions.

Front office usually refers to sales and marketing, and the back office covers administrative and support services, where call centers and BPOs usually come in. But middle office, on the other hand, refers to the segment within a bank or financial services firm that takes care of risk management, calculates profits and losses, and handles the information technology platform using the resources of front and back offices. Hence, the business of assigning middle office tasks to a third party is known as “knowledge process outsourcing” (KPO).

Vicious Cycle in Investing

A British investment banker, who was vacationing in the Philippines, was at the pier of a small coastal village in Surigao when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna.

The British investment banker complimented the Filipino fisherman on the quality of his fish and asked, "How long does it take to catch them?" The fisherman replied: "Only a little while".

The foreign investment banker then asked why didn't he stay out longer and catch more tuna? The local fisherman said he had enough to support his family's immediate needs.

The British then asked, "But what do you do with the rest of your time?" The Filipino fisherman said, "I sleep late, fish a little, play with my children, take a good time with my wife, stroll into the city each evening where I sip brewed coffee and sing-along with my friends at the karaoke bar. I have a full and busy life."

The British scoffed, "I am a CFA charterholder and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, then eventually opening your own cannery. You would control the production, processing, and distribution. You would need to leave this small coastal fishing village and move to Makati City, then Tokyo, Los Angeles, and eventually London where you will run your expanding enterprise."

The Filipino fisherman asked, "But, how long will this all take?" To which the investment banker replied, "about 15 to 20 years."

"But what then?" The British laughed and said that's the best part. "When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions of pesos."

"Millions . . . then what?" The British investment banker said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take a good time with your wife, stroll into the city in the evenings where you could sip brewed coffee and sing-along with your friends at the karaoke bar."

:)

I O U 100

Two stock brokers are in a bank, when suddenly armed robbers burst in, waving guns and yelling for everyone to freeze. While several of the robbers take the money from the bank tellers, others line the customers, including the two stock brokers, up against a wall, and proceed to take their wallets, watches, and other valuables.

While this is going on, one of the stock brokers jams something into the other stockbroker's hand. Without looking down, the second stockbroker whispers: "What is this?"

The first stockbroker : "It's the $100 I owe you!" :)

The Investment Banker's Rolex and Ferrari

A big time investment banker parked his brand-new Ferrari in front of his office, ready to show it off to his colleagues. As he got out, a van passed too close and tore off the door on the driver's side.

The investment banker immediately grabbed his BlackBerry smart phone, dialed 911, and within minutes a police officer pulled up. Before the officer had a chance to ask any questions, the investment banker started screaming hysterically.

His Ferrari, which he had just picked up the day before, was now completely ruined.

When the investment banker finally stopped from his ranting and raving, the police officer shook his head in disgust and disbelief. "I cannot believe how materialistic you are," the police officer said."You are so focused on your possessions that you don't notice anything else."

"How can you say such a thing?" asked the investment banker.

The police officer replied, "don't you know that your left arm is missing from the elbow down? It must have been torn off when the van hit you."

"My God!", screamed the investment banker. "My Rolex!" :)

Happy April Fool's Day!
  

"Chicken Money"

"Chicken money" is money a person can't afford to lose. For most individuals, it's all the money they'll ever have, and at their age or stage in life, they can't afford risking it.

The top priority for chicken money is safety and a certain degree of liquidity to keep up with inflation. Hence, a chicken money investor tends to put his funds to ultra-safe vehicles like savings or time deposits in banks, treasury bills, and money market mutual funds.

As such, chicken money investor is not so much concerned about the return on his money, but he is more concerned on the return of his money.

Houses on fire!

After we witnessed the rescue of mortgage couple Freddie Mac and Fannie Mae from the burning marketplace, this week we've seen the demise of the one-and-a-half century old Lehman Brothers investment house, the entry of Bank of America to Merrill Lynch's red hot premises via US$50-billion take-over payment, and the world's largest insurer AIG's US$40-billion dollar restructuring plea to the already Fed up agency.

All of them are victims of a lone market arsonist, known as Mr. Subprime.

Thus, Fireman Ben and his Fed department are now working double time to extinguish the market wildfire and prevent it from further spreading, lest it might reach White House and cause never-before-seen worldwide chaos and panic.

Covered bonds to bail out troubled US housing market

Four of the largest banks in America, together with the U.S. Treasury, are planning to launch a new investment vehicle in an effort to revive a slumping housing market. The four banks, namely, the Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, said on Monday (July 28) that they will be issuing covered bonds soon. They estimated that the issuance might reach US$1-trillion.

Covered bonds are widely used in Europe. They are secured by pools of assets like home loans. Unlike mortgage securities that pass all the risk to investors, covered bonds continue to perform even if the mortgages backing them default for as long as the bank remains solvent since covered bond loans stay on the balance sheet of the issuing bank, which mean that they are obligations on the bank. On the other hand, the issuing bank retains control of the assets that back the loans, normally high-quality home mortgages in good credit standing.

Meanwhile, in a related development, troubled investment bank Merill Lynch & Co. announced this week that it will take a US$5.7-billion write-down on the 3rd quarter. In a sign how troubled the investment bank's debt holdings have become, it has agreed to a fire sale of its US$30.6-billion collateralized debt obligations (CDOs) to an affiliate Lone Star Funds for merely US$6.7-billion. The deal only shows how big the impact is of the subprime crisis to major banking industries.

The "Art of Borrowing"

Art collections have long been used as collaterals for loans since the 17th century. In fact, Dutch master painter Rembrandt used his works to secure sorely needed loans to sustain his lavish lifestyle.

Currently, the practice is enjoying a renaissance as many art collectors are locked suddenly into illiquid assets cause by the popping real estate bubble and subprime credit meltdown.

New York-based Emigrant Bank Fine Art Finance says a valued client has recently borrowed against his US$100 million art collection. In the case of auction house Sotheby's, it reports that advances to sellers and term loans rose 23.2% at the end of the first quarter from a year ago to US$284 million.

However, banks are quick to point out that their borrowers are not short on means - just liquidity.

A client of Citigroup's art lending service, explains his cash is often tied up in investments; thus, he turns to financing from Citi Art Advisory when other funds aren't immediately available to build his collection.

Indeed, some collectors have used art loans to build an impressive array of antiques and master pieces.

With regard to the term of the loans, it varies according to the client's credit worthiness and paying ability, and duration of the loan. Thus, the longer the terms of the loans, which can run up to 20 years, the higher the interest rates. But other than that, banks are also examining the collections per se. Works by prominent, established artists that enjoy consistent demand are preferred.

Emigrant Bank Fine Art Finance says its lowest rates, based on LIBOR (London Interbank Overnight Rate), are currently about 4.2%, while the higher end loans are based on the U.S. prime rate, which is currently about 7%. Interest on Sotheby's advances, meanwhile, averaged 9.1%.

Paintings are usually being used as collaterals by most borrowers. Sculptures and rare musical instruments, like Stradivarius violins, are also sometimes used. But a big part of the appeal to borrowers is that the art remains with the borrower. Banks rarely demand to take possession of the art work, giving the collector some peace of mind in the process.

*Source: Financial Times (July 1, 2008).

ATM thieves going high-tech

Here's an alert notice I received via e-mail, warning consumers of high-tech modus operandi being employed by petty bank thieves. The source of the alert notice, according to the e-mail sender, is the Land Bank of the Philippines. So, let us all be aware!

Read the attachment for more details.

Plans to improve the Philippine capital market

In a bid to make investments in capital markets more attractive to Filipinos, the Philippine Stock Exchange (PSE) is currently spearheading some “capital market-friendly” projects and schemes.

The Personal Equity Retirement Account (PERA), which allows tax-free pension plans, has already been approved by a bicameral committee in Congress last June 10. It is widely expected to boost efforts to further enhance the Philippine capital markets as it will create a market for issuers of corporate debts and other investment instruments. The PERA Fund functions like a trust fund where the consolidated amount contributed by fund members will be invested in a portfolio of secured investments, wherein each contributor is entitled to a maximum of Php100,000 in contributions annually.

Another Congress-approved bill lobbied for by the PSE is the Credit Information System Act, which aims to establish an efficient, comprehensive and centralized credit information system.

The PSE also works on the approval by Congress of the Corporate Recovery and Insolvency Act (CRIA), which will replace the country's antiquated Insolvency Law. This proposed bill aims to provide a new lease on life for listed companies and brokers with financial difficulties.

The Real Estate Investment Trust (REIT) is also another proposed measure that aims to accelerate the development of capital markets. The scheme works like a mutual funds whereby a large portion of a pool of capital would be invested in income-generating real estate properties and investments.

Another similar proposal is the Collective Investment Schemes Law which aims to further promote collective investments schemes, like unit investment trust funds (UITF), by streamlining regulation.

J.P. Morgan chased Citigroup and dethroned the latter as the world's largest stock and bond underwriter

Citigroup was overtaken for the first time in 25 quarters (more than six years) as the world's largest underwriter for stocks and bonds, after J.P. Morgan Chase bagged the top underwriter in the first quarter of this year.

According to a report by Thomson Financial, J.P. Morgan Chase arranged US$129.4-billion of offerings, garnering a 10.2% market share, while Citigroup just registered with US$94.7-billion offerrings and a 7.5% market share. At third spot was Deutsche Bank with 7.2% market share at US$91.8-billion offerings.

It was a dismal quarter for the industry, as underwriting volume plummeted 45% and reported fees fell 7%. Although Visa's initial public offering (IPO) in the United States hit a record of US$19.7-billion, still many sectors showed steep declines, especially in fixed-income areas, where many investors have curtailed their buying of the said instruments brought about by the subprime crisis.

Speaking of subprime crisis, Swiss bank UBS had doubled its write-downs, by realizing additional US$19-billion loss on US real estate and related assets. As a result, it registered a US$12.03-billion net loss on the first quarter of 2008.

China Bank completes takeover of Manila Bank

The integration of Manila Bank branches into China Bank's network was finally concluded on Feb. 23, 2008, bringing the number of China Bank branches in the Philippines to 189.

During the course of the integration about 30,000 accounts were transferred and converted. All of Manila Bank's automated teller machines (ATM) were also reconfigured to run on the system of China Bank. Manila Bank's clients and depositors can now availed of China Bank's full range of products and services, including Internet and phone banking, bills payment and remittance services.

In a related development, Filipino-Chinese business clan, the Go family, reentered the banking sector anew by acquiring Anchor Savings Bank. The Go family's holding companies Equicom Manila Holdings and Pin-An Holdings Corp. bought the 29.45-million shares (equivalent to 77.61% of the outstanding capital stock) of Knights of Colombus Fraternal Association of the Philippines in the thrift bank at Php8.28 per share via a tender offer that was ended last Mar. 17. The bank will be named as Equicom Savings Bank.

The Go family formerly owned the Philippines' third largest lender, Equitable PCI bank, that is now belonged to the Sy family, which also owns and operates SM malls and Banco de Oro nationwide.

Is it time to bid goodbye to investment banks and say hello to universal banks?

With the investment banking sector looking shaky, many investors are taking a closer look at the prospects of universal banks. And to make matters worst , even employees of investment banking firms are reconsidering their career options in favor of banks with a balance sheet.

When Bear Stearns announced that it agreed to the emergency bailout by rival J.P. Morgan Chase and the Federal Reserve, the financial world again went into panic mode, expecting another catastrophe in the offing. And perhaps, we may consider a report by eFinancialCareers.com as ominous, which disclosed about three months prior to the sale of Bear Stearns that the firm's executives and front office managers have paid themselves hefty bonuses.

Most analysts predict that where Bear went, it is more likely that other broker-dealers will follow. And according to them that most probably Lehman, whose stock is sliding as more and more investors are pulling out, would be next in line. In fact, Lehman had already secured a US$2-billion credit facility from 40 banks led again by J.P. Morgan Chase and Citigroup.

In a related development, Lehman employees too are getting their money out of the investment bank, closing their accounts with the private wealth division, and selling all the stocks they can sell, according to a report in eFinancialCareers.com.

The Wall Street Journal points out that Lehman, together with other investment banks like Goldman Sachs, Morgan Stanley and Merrill Lynch, are all highly leveraged. Lehman's leverage ratio at the end of 2007 was 30.7:1, while Morgan Stanley was leveraged 32.6:1, Goldman Sachs at 26.2:1, and Merrill Lynch at 27.8:1. Most of them are expected to write down in the first quarter. By comparison, Bear Stearns was leveraged at 32.8:1, the most highly leveraged of the lot.

The other troubled investment bank to avoid for the foreseeable future is probably Dresdner, which is apparently being for sale by owner Allianz.

Investment banking is a confidence trick – they borrow money from the wholesale markets, buy assets with it, package them up and sell them on. But when the investment bank stops lending that money they’ll go under very quickly, as Bear Stearns has just proved.

On the other hand, universal banks with very good balance sheets are starting to look like the better option in this time of the crisis. Right now it seems that you're better off putting your money in a universal bank, if you are an investor, or working for the latter if you're an employee. Not unlike with investment banks, they have balance sheets and deposits that they can call on.

However, not every bank with a balance sheet is looking good. UBS, Societe Generale and Citigroup are looking very bad indeed after their billions of dollar write offs in connection to their subprime debacles.

With regard to Societe Generale, aside from the subprime write offs, the firm has to face also its US$7-billion losses in the European futures market caused allegedly by a rogue trader.

Meanwhile, thanks for the petro dollars coming in from the Middle East that bailed out Citigroup, and would most probabaly bail out other ailing banks as well.

The world's biggest IPOs

Visa's planned initial public offering (IPO) for March this year is estimated to reach US$16-billion in proceeds. A consortium of banks, including JPMorgan, Goldman Sachs, Bank of America, Citigroup, HSBC, Merrill Lynch, UBS and Wachovia are handling this mega-buck IPO. Banks that issue Visa cards (JPMorgan is the largest with a 23% share of Visa) stand to share a US$10-billion windfall.

Nevertheless, the IPO is still short of becoming the world's greatest. China's biggest bank, Industrial & Commercial Bank of China (ICBC), which has raised US$19-billion in Oct. 2006 is currently holding the title.

United States presidential hopefuls' solution to the subprime crisis

The reports sound intimidating about the humongous effect of the subprime crisis. Major investment banks had to write down billions of dollars in losses, mortgage lenders declared bankruptcy, and the Federal Reserve had to inject liquidity into the financial markets. The US property markets declined after years of record highs.

The culprit is the triple A-rated subprime mortgage. It is a structured investment vehicle - a type of loan granted to individuals with poor credit histories. Since subprime borrowers present a higher risk for lenders, subprime mortgages charge interest rates above the prime lending rate.

The subprime market performed quite well during its inception (thanks to its "AAA" rating) until it reached a point that the bubble it created became so big that it's about time to burst it. Soon enough, the US subprime market collapsed and its effects reverberated across the globe.

Now that the US presidential election is nearing, perhaps it would be good to know what the current crop of presidential candidates are thinking and what would be their probable solution to address the crisis.

To start with, strong contender Barack Obama wants to create a "universal mortgage credit," which would give homeowners who earn less than US$50,000 a year and don't itemize their tax return a 10% credit as non-itemized tax returns aren't eligible for the mortgage interest deduction. He further proposes to set aside a government fund to help in-debt home owners avoid foreclosures, as well as a standardized borrower score, which would allow home buyers to compare their ability to afford differing mortgage products.

On the other hand, Hillary Clinton wants to place a 90-day moratorium on foreclosures and a five-year freeze on interest rates. Likewise, she wants to set up a US$5-billion government-sponsored fund to help borrowers with negative equity.

For John Edwards, he wants also to freeze interest rates to allow markets to recover and to let homeowners avoid immediate foreclosure proceedings. He favors halting foreclosure activities until lenders provide assistance to borrowers, such as reducing interest rates or converting a loan to a fixed-rate mortgage.

But freezing interest rates is not a solution for Mike Huckabee, saying he is worried about the long-term effects on lending.

Meanwhile, the former New York City Mayor Rudolph Giuliani has a different view. He rather backs the action of the Federal Reserve and warns that the Sarbanes-Oxley fallout could affect any subprime-related regulation. He says this regulation amounts to a tax as it increases the cost of business.

With regard to John McCain, he hasn't put forth a concrete position, but stressing a relief is needed, though he warns against the unintended consequences of federal action.

Likewise, Mitt Romney hasn't articulated his own position on how to deal with subprime lending, but has agreed with the so-called "Bush-Paulson" plan that places a short-term freeze on interest rates and gives local governments the authority to rewrite problematic loans.

*Source: http://www.forbes.com

PayPal is now available in the Philippines

Pay Pal, an eBay company, announced a new bank withdrawal feature that enables registered PayPal users in the Philippines to withdraw money from their PayPal account directly to a Philippines bank account.

It is a welcome development especially for Philippine sellers as it will provide them greater convenience in doing business globally and faster access to their funds.

This is how it works. Just add your Philippine bank account to your PayPal account in order to conveniently withdraw your money.

Step 1: Log into your PayPal account

Click the 'Profile' tab and then click 'Add or Edit Bank Account'.

Step 2: Add your bank details

The bank code is a 9-digit number. This number is different from a SWIFT code required to send international wires. Add your local Philippine bank account details and click 'Continue’.

Important:

Please note your first name and surname on your PayPal account must match the name on your bank account. If it does not, your withdrawal request may be rejected by your bank. Follow the instructions below if your withdrawal is declined:

1. Contact your bank directly to request acceptance of the transfer
2. Withdraw your funds from your PayPal balance to your Visa credit, debit or prepaid card.

Step 3: Review your bank account information

Review your bank information and click 'Add Bank Account' to confirm.

Step 4: Confirmation

For funds withdrawal, just follow the following steps:

• Log into your PayPal account

Click the 'My Account' tab and then click the 'Withdraw' sub tab.

• Select the 'Withdraw funds to your bank account' option

Withdrawals equal or more than Php7,000 are free. For withdrawal amounts of less than Php7,000, there will be a fee of Php50.

• Select the bank account and amount to withdraw

Important:

You must become a verified PayPal member in order to withdraw funds from your account. To start the verification process using your credit card, please click the 'Lift this limit' link on the "Withdraw funds to your bank account" page. Please note verification may take 3 to 4 business days to complete.

• Confirm the transfer

All local banks can be used to withdraw the funds, and it typically takes 5 to 7 business days for the funds to reach your bank account. There is a minimum withdrawal limit, though. It depends upon the currency which you want to withdraw. Please refer to the table below.

However, PayPal only supports withdrawal to peso for bank accounts located in the Philippines. Regardless of the foreign currency (USD, EUR, AUD, etc.) you are withdrawing from your PayPal account, the funds will be converted to your local currency. However, you can withdraw funds in US dollars, if you have a United States bank account. Likewsie, the functionality to withdraw your PayPal balance to a Visa debit card, credit card, or prepaid card is still available.

For registration, you may visit: http://www.paypal.com/cgi-bin/webscr?cmd=_display-approved-signup-countries-outside.

Metrobank earns international CSR distinction

A leading business publication in Asia, the Asian Banking and Finance Magazine, has given Metropolitan Bank & Trust Company (Metrobank) a distinction for the Best Corporate Social Responsibility (CSR) Program.

It has been the tradition of Metrobank, the leading and biggest bank in the Philippines, to celebrate Filipino excellence and present wellsprings of hope in the future for the country. The bank's guiding philosophy is to give back and share the fruits of their success with society who made possible the success in the first place.

For over 28 years, Metrobank has conducted and sponsored various programs, most notably of which are the Search for Outstanding Teachers, the Metrobank Art and Design Excellence, The Outstanding Philippine Soldiers, the Country's Outstanding Policemen in Service, the Metrobank Math Challenge, and the College Scholarship Program.

This is the third international CSR award garnered by Metrobank. It only shows that Metrobank leads the way in good corporate citizenship and shows the many possibilities how business can contribute to nation building.

The Philippines gets a positive outlook rating from Moody's

Moody's Investors Service upgraded yesterday, January 25, its outlook on the Philippines from “stable” to “positive”, citing the government's easing dependence on foreign loans. The ratings include those for long-term government foreign and local currency, foreign currency bank deposit ceiling, and foreign currency country ceiling.

Improved macroeconomic environment and good fiscal performance are mutually reinforcing each other as a stronger peso and lower domestic interest rates have significantly lowered debt service payments.

This positive outlook rating may pave the way for an actual credit ratings upgrade for the country. Thus, the government hailed the decision of the prestigious credit rating agency. A credit rating upgrade may entail cheaper foreign borrowing. It will likewise make the country more attractive to foreign direct investments – an area in which we are lagging behind four Southeast Asian neighbors, namely Singapore, Malaysia, Thailand and Indonesia.

The last time Moody's raised the country's credit rating was in November 2006. The agency then upgraded the rating from “negative” to “stable” credit rating.

Qualities of an Investment Banker

This is based from the article, Modern Investment Banker, written by Gary P. Cheng, President & CEO of Amalgamated Investment Bancorporation. The article was published in the Business World on January 22, 2008.

He views investment bankers as not just middlemen or intermediaries – brokers, dealers, arrangers, negotiators – but also advisors and consultants. Nonetheless, being intermediaries, investment bankers are necessarily agents, not principal. Their role is to advise clients, then clients decide; and jointly, clients and investment bankers execute decisions. They are, thus, professional intermediaries who help clients choose and realize the strategies that will best increase the clients' value. They are in the business of providing decision-making options to corporate and individual clients ranging from basic strategies to highly-sophisticated schemes, where sometimes none seems to exist.

In the article, three types of advice investment bankers normally provide were mentioned.

In determining where the company is and where it optimally might be in the value chain, the investment banker is said to be providing his industry perspective. In the example made by the writer for a telecommunication firm he cited several options that the firm could adopt for its operations, i.e., remain wireless or get wired or both, consider reselling or improve end-customer focus, bring value-added services, among others.

One recent example of a strategy that was executed using this perspective was that of San Miguel Corporation (SMC). The biggest food conglomerate in Asia decided to divest some of its food assets and forgo its focus on beer manufacturing, instead it trains its sight into a more lucrative and promising business in the heavy industries, which include power generation and mining.

In strategic perspective, the investment banker is providing growth options for the company either by expanding geographical reach or through business combinations, which may include forward, backward, horizontal, vertical, or diagonal business integrations via mergers, acquisitions, consolidations, joint ventures, commercial partnerships, and consortia.

In the Philippine banking sector, mergers and acquisitions are prevalent. Just last year, Banco De Oro completed its acquisition of Equitable-PCI Bank, while Union Bank acquired International Exchange Bank. In the power sector, the game industry players play in bidding for government power assets is consortium building because of the industry's capital-intensive nature. In fact, investment bankers themselves, a few of them, are actually members of the consortium.

The third type, financial advice, is normally what investment bankers provide to clients. However, other than advising on plain vanilla equity or debt, most investment bankers nowadays are giving more varied and complex investment and financing strategies.

According to Cheng:

“There are now sophisticated instruments proliferating in the mezzanine layers of the capital structure, which could be securitized or otherwise, with bells-and-whistles that may include warrants, convertibility and redeemability features, with prices or coupons possibly indexed to some tradeable item (e.g., bandwidth prices).”

As you will notice, the options are virtually endless, yet it is still the client or the company who will decide on what they want and ought to do.

In the ever-complicating dynamics of the market, “it is almost impossible for an investment banker to be successful nowadays simply by being a generalist advisor or a professional broker of deals”, as revealed by the writer. Cheng outlined his list of requisite qualities for a modern investment banker.

1. Investment bankers are industry specialists.
2. Investment bankers are product specialists.
3. Investment bankers are generalists in having the intellectual capability to understand other sectors and products.
4. Investment bankers are generalists in having the ability to step back and see the bigger picture.
5. Investment bankers are analysts with a solid grounding in quantitative methods required to address any client problem.
6. Investment bankers are analysts in being able to qualitatively interpret the results of their quantitative analyses.
7. Investment bankers are psychologists with a good grasp of human motivation and behavior.
8. Investment bankers are diplomats and politicians with the sensitivities to maneuver through complex situations.
9. Investment bankers speak and write well.
10. Investment bankers are philosophers in knowing that they need to know more.
11. Investment bankers exhibit the traditional values of integrity, client focus, hard work, diversity, and passion for excellence.
12. Investment bankers rarely lose their sense of humor.
13. Investment bankers strive to be physically healthy.

Not one investment banker embodies all of these qualities to the same degree. That is why to become successful, investment bankers should inspire group dynamics and embrace diversity to acquire synergy.

*Source: Gary P. Cheng, "Modern Investment Banker", Business World, p. S1/5.