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no binding/type specified HK$250.00
Inkstone Books
Paddyfield.com
More reviews by Michael Hsu
Readers may purchase reviewed books from Paddyfield.com, Asia's online bookseller.North American readers may prefer to buy US editions from Powells.com.
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Money for the Bank: A Banker's Guide to Marketing by Peter Geldart
This short, at times funny, practical guide for the rookie bank executive reads deceptively straight-forward. PETER GELDART, a seasoned warrior in the rarefied business of investment banking, believes that its marketing skills are "fundamentally similar to those that apply to all businesses."
Paradoxically, though, he admits in conclusion, "financial products can be far more complicated than rocket science, a great deal more expensive when they go wrong." With the vagaries of financial market conditions and services, uncertain customer motivation and satisfaction, and intense competition, it is obvious that investment or merchant banking is not a simple calculus to be applied but an exercise where marketing rules over research and experience trumps the fixed formula.
MONEY FOR THE BANK: A BANKER'S GUIDE TO MARKETING provides the A-B-C of a completed "mandate," defined as "the award of a deal." Pitching a particular product or responding to a solicitation for proposal, the banker's first move is to know her customer, Geldart underscores. While "groveling is good," practitioners also need to ask for the business. "I was often surprised at how many bankers would fail to solicit real opportunities," he adds.
Geldart attributed a number of reasons why an experienced banker would fail to ask for the business. Probably she may not understand the customer or she is not properly advised that the customer is interested in a specific financial advice or transaction. Alternatively, the banker may have deliberately not asked for the business because she does not want it: be it uncompetitive pricing, the wrong strategy, or conflict of interest.
Behind every marketing move, or in this case, a non-move, there is an art to the mandate. As illustrated in a merger and acquisition example -- this monograph would greatly benefit from more detailed, "disguised" but actual case histories -- the banker on the seller side will emphasize her ability to maximize the price, "but in a pitch to another customer interested in buying the same asset you will stress your ability to assess the right price to bid without paying more than necessary to win."
Even when the banker loses out on a deal, there are good lessons to be learnt. "There may be consolation prizes, and you can always learn from the experience," Geldart says. That a mandate failed may have to do with a host of reasons: the loser's capabilities, pricing ("sometimes the way the fees are structured is more important than the amount"); personal chemistry between the bank and its client; or specific deal terms covering defaults, ownership covenants, or indemnification as in contentious MAC or material adverse change clauses where the underwriters can call off their commitments at any time based on their perceived events.
However, if there is "foul play" involved, as when the customer received unethical or illegal inducements from the winning bank, "you may well be lucky to have lost." Just like those bankers, Geldart further reminds us, who now bitterly regret the day they were finally able to begin lending to "a major, aggressive energy-trading company in Houston formerly notorious for the competitiveness it demanded of its core relationship banks."
- Editor's note: Inkstone Books is a division of Chameleon Press, associated with this publication.
Michael Hsu
14/04/2005
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Michael Hsu is a senior editor of banking laws in America.
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