I'm in the county town, and you say I'm a big shot?

Chapter 774, Section 773: "While we see the benefits, we cannot ignore the potential risks."

Fang Qingye soon received a call from Chen Yue, who informed him that the relevant departments were compiling the materials according to his requirements and expected to send them to the designated email address as early as that afternoon.

"Thank you, you've worked hard." Fang Qingye hung up the phone without urging him to hurry.

All we can do now is wait for the outcome.

However, even as the end of the workday approached, there was still no activity in the email. Fang Qingye wasn't in a hurry; she just glanced at her watch and realized it was almost time to head to the banquet.

He knew in his heart that a single meal wouldn't be enough to change Mayor Wang's mind and bring him back to the negotiating table. Unless he presented a sufficiently compelling reason, it would all be in vain.

But since an invitation has already been extended, we might as well go with the flow and take the opportunity to maintain the relationship, while also buying some time.

The banquet was held in a private room in the banquet hall on the third floor of the Shangri-La Hotel. Vice Mayor Wang Zheng arrived as scheduled, accompanied by Lu Guoxiong, general manager of the city investment company, Yan Zhengqing, director of the State-owned Assets Supervision and Administration Commission, and others.

Fang Qingye brought Chen Danlu and Qian Duo with him, along with Zhou Yu as his secretary, and Lin Wei and her assistant also attended.

The atmosphere at the banquet was still very lively. Mayor Wang was from Shandong Province and had an excellent capacity for alcohol. Zhou Yu came in handy, and before long, three bottles of Moutai were empty.

Of course, I can't forget about the important business.

"Mayor Wang, I heard that Hengtai Securities is also interested in the Urban Investment Company project?" Fang Qingye asked casually while using serving chopsticks to pick up a piece of fish for Wang Zheng.

Wang Zheng did not shy away from the question: "Yes, their CEO Niu has also contacted us, and the terms he offered are much more favorable than yours."

"I heard they submitted a 'Strategic Subscription and Cooperation Proposal,' which mainly contains three points..." Fang Qingye shared the information she had gathered.

“Hehe… President Fang’s information network is indeed very good.” Wang Zheng laughed. “That’s right, their terms are indeed more attractive—a lower issuance rate, which can save local governments tens of millions of yuan in interest expenses.”

“But Mayor Wang, if I may be so bold,” Qian Duo, sitting at the lower end of the table, couldn’t help but interject.
“We have reviewed Hengtai Securities’ half-year results published on the Hong Kong Stock Exchange. How much net capital can a brokerage firm with a profit of only 1.98 million yuan in the first half of the year, a year-on-year plunge of 83%, possibly have? Using 1 billion yuan of its own funds for a single investment is tantamount to asking a person weighing 100 kilograms to lift a 1,000-kilogram cauldron—this seriously violates the core principle of ‘matching scale with risk’ in the securities company’s risk control management regulations. I suspect that their internal control system has become a mere formality.”

“President Qian, you can’t say that,” Lu Guoxiong, general manager of the city investment company, interjected, refuting the argument.

“We cannot view the issue statically. Brokerage firms’ performance is inherently volatile. The first half of the year may have seen proprietary trading losses or one-time write-offs. This could actually be a signal that they are taking a ‘big bath’ and lightening their load. At this time, they need a high-quality asset that can generate stable cash flow to repair their balance sheets. The ‘Yongjiang Urban Investment Bond’ has a high credit rating and stable returns, making it an ideal target for them to adjust their asset structure.”

"Why should we trust a management team that can't even maintain its core business and can't generate stable returns for shareholders to make such a significant and seemingly uncertain investment decision? This doesn't make sense from a basic business perspective. If I were a shareholder of Hengtai, I would question whether the management is engaging in a high-stakes gamble with no chance of success, seriously damaging shareholder interests," Qian Duo retorted.

"By daring to make a heavy bet on the most certain assets during the most difficult times, Hengtai's management team demonstrates its boldness and foresight. They are betting on the future of Yongjiang. If successful, this investment will not only be a financial victory but also an excellent public relations case for reshaping the market image. Fortune favors the bold, and sometimes the most illogical decisions can open up new prospects," Lu Guoxiong continued to argue.

Fang Qingye figured it out.

Lu Guoxiong clearly favors Hengtai Securities. Is it because he genuinely believes that the other party's conditions are better, or has he secretly received some kind of benefit?
unknown.

Seeing that Qian Duo still wanted to argue, Fang Qingye stopped her with a look and then smiled:
"Mayor Wang, President Lu, I understand your considerations. Local governments are under considerable financial pressure these days, so saving tens of millions in interest and securing billions in investment is indeed a worthwhile deal. However…"

He then changed the subject: "While we see the benefits, we must not ignore the potential risks."

"Oh? Risks? Are you referring to what President Qian just mentioned?" Lu Guoxiong's tone was slightly sarcastic.

"Actually, for our city investment company and for Yongjiang, Hengtai Securities' commitment to purchase 10 billion yuan of bonds is real money coming into our pockets! As for the underwriting—Yongjiang City Investment has a credit rating of AA+, so why would we worry about finding buyers for our issued bonds? Otherwise, you and Mr. Lin from Goldman Sachs wouldn't have taken the initiative to compete for the underwriting!"

Lu Guoxiong's words drew a slight nod from Mayor Wang, clearly indicating that they shared the same idea.

Fang Qingye calmly replied, "President Lu is right. But have you considered that Hengtai Securities might not simply hold onto these 10 billion yuan in bonds and collect the interest, but rather use them as bridge financing to issue ABS?" "ABS?"

Lu Guoxiong's expression changed drastically. Wang Zheng was somewhat confused, so Yan Zhengqing, the director of the State-owned Assets Supervision and Administration Commission, quickly explained in a low voice.

After listening, Wang Zheng's expression also turned serious. He looked at Fang Qingye and asked, "President Fang, do you think Hengtai Securities will use these 10 billion yuan in bonds to make ABS?"

“Yes. As President Qian just mentioned, Hengtai Securities’ performance is so poor, yet they are still willing to invest 10 billion yuan. Is it just for that little bit of interest? I would do the same if I were in their shoes.” Fang Qingye said with certainty.

"Do you have any evidence?" Lu Guoxiong stared intently at him.

“No,” Fang Qingye said frankly, “this is just our internal assessment. I think, President Lin—” He looked at Lin Wei, who had been relatively silent all day, “Goldman Sachs must have done a similar assessment as well, right?”

“Yes, our risk control team’s assessment results are consistent with President Fang’s.” This time, Lin Wei sided with Fang Qingye.

“So, Mayor Wang,” Fang Qingye said sincerely, “our Jinghai Bank and Goldman Sachs are not lobbying for the sake of competing for the project, but rather hoping that you can carefully assess the risks involved and make a prudent choice.”

Wang Zheng listened and pondered for a moment, then said, "Thank you for the reminder."

Fang Qingye knew that she had said everything she needed to say for today.

After the banquet, everyone left.

Fang Qingye returned to his hotel room and suddenly received a WeChat message from Chen Yue, the secretary of the board of directors of Baoshang Bank. The message said that the staff had worked overtime to compile the materials and sent them to his email address, and that he could contact her anytime if he had any questions. He immediately opened his laptop and logged into his email, and sure enough, he saw the materials sent by Baoshang Bank, which listed several items:
Infrastructure public REITs project in Hohhot, Inner Mongolia
Scale: 50 billion yuan
Our role: Funds supervisory bank
Summary: The underlying assets are the core area industrial park and talent apartments. Our bank is responsible for the collection, transfer and supervision of the raised funds.

Project status: Issued at the end of last month.

"Xin'an 2016-1" Auto Finance Asset-Backed Securities (ABS)

Our role: Custodian bank

Summary: The underlying assets are personal auto loans from a certain auto finance company, and our bank is the fund custodian designated by the plan manager.

Project status: Under preparation

……

There are eight projects in total, but Hengtai Securities' ABS project is not among them!

This did not surprise Fang Qingye, and he carefully flipped through the pages.

Haha, there's no custody service from Hengtai Securities?
It's okay, these things are pretty good too. I guess the Inner Mongolia Banking Regulatory Bureau would like to see them as well.

He immediately forwarded the document to Tang Qing's private email address at the Inner Mongolia Banking Regulatory Bureau, along with a message asking him to check for any irregularities—after all, the country is currently cracking down on off-balance-sheet activities of commercial banks.

After finishing his emails, he closed his laptop, walked to the window, and quietly gazed at the night view outside.

Just then, the knocking sounded again.

(End of this chapter)