One of China’s largest state-owned infrastructure companies excluded UBS from a bond deal after the bank’s global chief economist used the phrase «Chinese pig», which had led to an uproar.
China Railway Construction Corp (CRCC) decided to drop UBS as a joint global coordinator on a dollar-bond sale because of last week’s pig remark, «Bloomberg» (behind paywall) reported, quoting people close to the matter.
Instead, the Beijing-based company hired Citigroup, HSBC Holdings and ICBC International as joint global coordinators for the bond sale, people familiar with the matter said last week.
Signalling Impact
CRCC is the first known corporate issuer to distance itself from UBS over the sensitive comment that has captured the attention of the financial community and threatens to derail the Swiss bank’s push into Asia’s largest economy.
While lost fees from the deal may be insignificant to the Swiss bank, it is the signal sent by such major state-owned company that is worrying. Last November, fashion powerhouse Dolce & Gabbana published a promotional video for its event featuring a Chinese model attempting to eat Italian food with chopsticks, which sparked public uproar in China.
The damage did not stop at the cancellation of a fashion runway show; major e-commerce platforms across China — including Tmall, JD.com, Suning Tesco, Netease Koala and Vipshop — removed products from the brand, as reported by «Business Of Fashion».
Stakes Are Stacking Up
The stakes are high for UBS, which has had a presence in China longer than most Wall Street firms and was the first foreign firm to win approval for a majority shareholding in a local securities venture after the country relaxed foreign ownership rules.
The «Chinese pig» comment by London-based economist Paul Donovan, which appeared on Wednesday in his analysis of the country’s swine flu epidemic, was interpreted as insulting by China’s state-owned media and led at least one Chinese finance firm, Haitong International Securities Group, to cut business ties.
