Leading financial firm China CITIC Group (CITIC) is bidding for
a stake in Bear Stearns, one of Wall Street's top investment banks,
top officials said Tuesday in Beijing.
Jiang Dingzhi, vice-chairman of the China Banking Regulatory
Commission, and Chang Zhenming, president of CITIC Group, said the
group is keen on a stake in the US bank.
Neither Jiang, speaking on the sidelines of the Communist Party of China's (CPC) 17th National
Congress on efforts by Chinese financial companies to expand
abroad, nor Chang would reveal any more details such as the size of
the stake or the price.
Bear Stearns ranked 7th among Wall Street investment banks by
revenue before it suffered the hardest from the US subprime credit
crisis, which has caused its market value to drop as much as 25
percent this year to US$17.4 billion.
Warren Buffett, the billionaire chairman of Berkshire Hathaway
Inc, is also interested in buying a stake in Bear Stearns, the
New York Times reported on September 26. Other potential
investors are Bank of America Corp, Wachovia Corp and China
Construction Bank.
"At the moment, Bear Stearns is a bargain," Arthur Lau of JF
Asset Management in Hong Kong told Bloomberg. For China, it's
important to have a platform to learn more about investment
banking, he said.
Wu Yonggang, an analyst with Shanghai-based Guotai Junan
Securities, said buying a stake in Bear Stearns will help CITIC
connect the booming domestic capital market with the United
States.
CITIC owns 26 percent of CITIC Securities, the Chinese brokerage
whose market value has more than quadrupled this year to US$50
billion, making it Asia's largest securities firm. The company also
controls 62 percent of China CITIC Bank Corp, which raised US$5.95
billion in a Hong Kong initial share sale in May.
"By expanding overseas, CITIC will gain valuable experience in a
leading investment bank," Wu said.
"But Chinese companies are not familiar with the overseas market
or international merger and acquisition issues, and that could be a
disadvantage," he warned.
China Minsheng Banking Corp, the Chinese mainland's first
privately owned bank, said earlier this month said it may buy a
stake in UCBH Holdings Inc, the biggest bank serving the Chinese
community in the United States.
(China Daily October 17, 2007)
