Major players in the ex-Japan Asia securitization business are sending mixed messages. Last month saw the departure of Greg Park from Credit Suisse First Boston; with the bank making no move to replace its head of Asian ABS. Park last week resurfaced at Calyon, the investment banking arm of Credit Agricole, who is attempting to rebuild its franchise.

But while it seems that CSFB, one the region's most successful houses, is cutting back, others are decidedly pressing forward.

It has emerged that JPMorgan Securities and Morgan Stanley are designating people to work on the ex-Japan business out of their Hong Kong offices rather than Tokyo. Jun Qian has left Bank of America to head up Morgan Stanley's ex-Japan Asia business. Qian has been a familiar face on the Asian conference circuit for some time and is believed to have sought a move to Asia for some time. Although he remains in New York for the time being, it is expected he will leave for Hong Kong soon.

Meanwhile, as a result of JPMorgan's merger with Bank One Corp., the bank will send over some members of Bank One's ABS team to Hong Kong. Bank One had enjoyed some success in the region, notably Korea, where it arranged deals for clients including Kookmin Card. It is believed JPMorgan wants to leverage those relationships and build new ones.

Officially, JPMorgan has been running its business from Tokyo since mid-2001, when ex-Japan Asia head Paul Burke took up a position in London, Alec Yang left for Nomura and RJ Sarthou moved to Tokyo. Morgan Stanley had already centralized its entire Asian operation in Tokyo some years prior to that, but in December 2002, the bank let go of all four members of its specialist ex-Japan Asia group, which was led by Cheng-Yi Tong.

Rival bankers have always dismissed the doing things from Japan' claim as demonstrating a lack of commitment to the region. Morgan Stanley, for example, has not arranged any cross-border deals since the $299.6 million MBS it put together for Korea's Samsung Life in December 2002, just before it made the cutbacks. The bank is rumoured, however, to be building a future flows structure for Vietnam Oil and Gas Corporation, known as Petrovietnam (see p. 22 for more details).

In fairness to JPMorgan, the bank did not make a complete withdrawal from the market. However, its involvement on the 142.5 million ($174.8 million) CMBS deal for Ascendas Real Estate Investment Trust (see last week's ASR) in Singapore is its most significant mandate since its ex-Japan Asia team was disbanded.

So, what are we to make of the new appointments? The re-entry of two big houses - in addition to Calyon's hiring of Park and HSBC's aggressive recruitment strategy - suggests that investment banks see plenty of potential in the region.

But as has been evinced by CSFB's apparent move in the opposite direction, there are misgivings about the region's potential. One specialist securitization recruiter said it was a strange time to be hiring. "Certain houses are being very aggressive in winning market share, but it is doubtful they are making much money from securitizations, as activity is not increasing that much," he said.

The head of ex-Japan Asian ABS at a rival investment bank shares that view. "I think that some big teams are going to struggle unless they are doing disguised lending through conduits on a big scale," the banker said. "Most of the real investment banks will find it extremely tough. There is barely enough business as it is and there is a lot of fee cutting. Low fees have been an unpleasant fact of life for some time and are not going to change anytime soon. One explanation for them hiring is they are taking a long-term view on China and need regional deals to make them more credible."

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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