Three years ago, Peregrine was feted as the bank that said 'yes' to deals more staid operators walked away from. Chairman Phillip Tose boasted of his Asian style wheeler dealing prowess that left Western competitors scrambling to catch up. Powerful corporate patronage, equity trading, underwriting and lately bond market prowess helped make Peregrine the region's first full service home-grown investment bank to challenge the big boys. Bold regional ambition was rooted in its Hong Kong base and perception of being tightly connected to Li Ka-shing and leading lights such as Citic Pacific. Mr Tose talked unabashedly of dealing with pariah regimes and went about building a regional branch network to grab business. The experience has been decidedly mixed. Skirmishes with regulators have dogged the bank that promised to finesse traditional practice and operate according to superior relationships. A 1993 rap by Hong Kong regulators for making a false market in small-sized initial public offerings was followed by a licensing scandal in Vietnam and a scam in Burma that resulted in lengthy litigation against a US employee. Now, Peregrine faces investigation in Bangladesh with its investment banking managing director facing arrest after allegations of share-price manipulation. In a tough statement, the bank claimed to be the victim of a political witch hunt and innocent of all charges. Early indications suggest politics was indeed behind the crack-down. Observers doubt arrests will be forthcoming and have described the incident as a political stunt to weed out scapegoats following the Dhaka market collapse. Peregrine, for its part, claims to have sent warnings of an unsustainable speculative bubble to the authorities last October. Whatever the outcome the episode represents another embarrassment for a firm that was supposed to foster the connections to avoid such clangers. Indeed, the whole premise of being an 'Asian' player somehow liberated from the compliance constraints of big European and United States banks looks redundant. In reality, the idea was always over-stated, permitted only by the firm's head start in many areas of Asian finance. Three years ago, US firms suffered the effects of building their operations too fast when markets turned dramatically downward. They had dashed into a high-growth, high-margin business that seemed to offer rewards long squeezed from developed markets. Along with established players like Jardine Fleming and Barings, Peregrine seemed to have the regional know-how to extract maximum benefit. For sure, most of its business remained in Hong Kong. Running the trading and corporate finance accounts of blue chip players like Li Ka-shing and Hopewell's Gordon Wu Ying-sheung afforded huge benefits in the information loop allowing firms to trade effectively. As an early covered warrant issuer it was dominant when other banks lacked the necessary risk management infrastructure. These days, margins have shrunk to the point of parsimony, leaving Peregrine a bit player in a fiercely contested market. The maturing of emerging Asian markets has seen the firm face catch-up in many areas where the primacy of relationships is no longer critical. The so called trend of 'commoditisation', where margins are squeezed as innovations become everyday products, is eroding traditional advantages. Earlier this week, Peregrine Investment Holdings reported disappointing results, attributable profit dropping 15.2 per cent, in the absence of exceptional gains. While its asset management business bleeds money, the expanded fixed income operation is making strong headway as an underwriter and trader of second tier regional debt. That business will undoubtedly see the same margin erosion as competition increases. In the meantime, the bank that likes to say yes to every opportunity might become more circumspect in choosing regional partners.