INVESTMENT banks eager to get a slice of the booming Asian financial market are aggressively undercutting the pricing of deals, causing concern among bankers that investors will later be introduced to sub-standard issuers. Vincent Fan, chief executive of Citicorp International, which has just been named Investment Bank of the Year by Asiamoney magazine, conceded that recent competition among investment banks to grab the mandates for arranging financial deals in Asia has intensified. ''Newcomers, mostly American houses, do not build up their presence in a gradual way. Instead they buy into the business. They buy the people, they buy the deals and they buy equipment and set up their presence overnight,'' Mr Fan said. Although the investment banks possess strong distribution capabilities, they have not been in the Asian region for very long. The rapid development in the region in the past few years has taken these banks by surprise. They have been caught without enough good staff and resources to cope with the sudden expansion. To get into the market quickly they use cut-rate pricing to lure customers, igniting a price war in the investment banking field. While more players and more deals will help develop the depth and liquidity of the Asian market and its competitiveness, there are hidden dangers behind this financial warfare. ''Profit-margins will be squeezed and the banks may be doing deals they should not do, either because of the marginal pricing or because the names are not good enough,'' Mr Fan said. With the quality of issuers deteriorating, investor confidence in the market becomes damaged. At present, Asian issuers tapping the international market through equity instruments such as convertible bonds or debt securities such as bonds are mostly unrated. ''Investors either know the names personally or they believe in all the due-diligence work done by the investment banks, trusting that they have screened the best borrowers for the investors,'' Mr Fan said. However, with the price war and the unscrupulous vying for business, ''sub-standard issuers may be over-sold'', he said. Furthermore, more banks coming on to the market means there will be a shortage of trained personnel. ''That means banks may not be employing the best people for the job,'' he said. Fortunately, these problems may take some time to surface because banks still have enough good targets to pursue. There is a sufficiently large number of good quality borrowers in Asia who are unknown to the market. ''Until this pool is exhausted, then we will find investment bankers wooing the lesser-quality borrowers. That is the time for concern,'' Mr Fan said.