The Wall Street Journal reports that UBS Investment Bank is said to have been working for little or no money as it bids to pull ahead of its rivals to clean up in Hong Kong, where the government is planning a 'massive' privatization drive.
The newspaper reports that the bank has as many of 30 people working on feasibility studies for the Hong Kong government for almost nothing as it tries to muscle in on future action. UBS will clearly claim that, having work up many of the studies, it will be ideally suited to undertake much the potentially lucrative privatization advisory work, as it will have a better insight into transactions than its rivals. And the stakes are high, with bankers estimating that up to $40bn could be raised from privatizations in Hong Kong in the next ten years.
Other firms in the hunt include CSFB, Citigroup, Goldman, Merrill, JP Morgan and HSBC. Although UBS will have egg on its face should its strategy backfire and lucrative governement mandates go elsewhere, the smart money is on the bank doing very well. The Hong Kong government does appear to be quite cost-conscious and has tended in the past to favour firms prepared to do work on the cheap.