China Bank Bids for Bear Stearns Stake
Tuesday, October 16, 2007; 10:34 AM
BEIJING -- A bank owned by the investment arm of China's cabinet is bidding for a stake in U.S. securities firm Bear Stearns, a Chinese regulator and an executive said Tuesday.
The comments were the first Chinese confirmation of reports about the bid for part of the fifth-largest U.S. securities firm, which has been hit hard by recent credit market turmoil.
China Citic Bank Corp., owned by China Citic Group, is bidding for a stake in Bear Stearns Cos., vice chairman Jiang Dingzhi of the China Banking Regulatory Commission said during a meeting at a Communist Party congress. Jiang gave no details.
Separately, Citic Group Vice Chairman Chang Zhenming said there hasn't been any "material progress" in Citic Bank's participation in the Bear Stearns bid.
Bear Stearns in New York did not immediately respond to phone calls seeking comment.
The New York Times reported earlier that Bear Stearns is in talks with several outside investors and could sell as much as 20 percent of itself.
Buying a stake in a major financial firm could give Citic Bank, China's seventh-biggest lender by assets, a niche from which to learn about the U.S. securities industry.
Citic Bank and other Chinese lenders are growing rapidly amid an export-fueled economic boom and are expanding abroad. But they are novices in global markets and at handling complex financial deals.
The Bear Stearns bid comes as Chinese companies step up investments abroad.
An agency created by Beijing to invest $200 billion from China's foreign exchange reserves paid $3 billion this year for a stake in U.S. investment fund Blackstone Group LP.
Citic Bank is flush with cash after raising $5.4 billion in April in a dual initial public offering on the Hong Kong and Shanghai stock markets.
The bank is controlled by Citic Group, the investment arm of China's cabinet. Citic Group _ short for China International Trust and Investment Corp. _ was created in 1979 to nurture the growth of private business at the dawn of China's economic reforms. It has investments in a wide range of industries in China and abroad including airlines and banks.
Citic Group reported after-tax profits last year of 6 billion yuan ($800 million) on assets of 929.2 billion yuan ($124 billion).
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