An investment bank controlled by the Chinese government is interested in buying a stake in Bear Stearns, the Wall Street securities firm hit hard by the subprime mortgage sell-off, an executive of the Chinese firm and a Chinese regulator said on Tuesday.
The comments were the first official confirmation that a Chinese entity was joining the bidding for a stake in Bear Stearns, which has held discussions with several outside investors as it seeks to shore up its balance sheet after suffering heavy losses during the summer's credit market turmoil.
Bear Stearns had no comment about the report.
If the bid succeeds, the investment bank, the China Citic Group (
Citic may hope that a foothold in Bear Stearns -- Wall Street's fifth-largest securities firm -- would increase its ability to handle complex financial deals and compete internationally.
Citic vice chairman Chang Zhenming (常振明) confirmed the bank's intention to bid, but said there had not been any "material progress" in its talks with Bear Stearns.
Jiang Dingzhi (
Both men spoke on the sidelines of the Chinese Communist Party's 17th Congress, which began on Monday in Beijing.
Chang said he had known Bear Stearns chief executive James Cayne, for 15 years.
He said he and Cayne, a bridge enthusiast, "played cards together back in 1992."
Bear Stearns' share price, profit and reputation slipped after the collapse of two hedge funds it managed. The firm has held talks with several potential investors, including Warren Buffett, Bank of America, Wachovia and one other Chinese firm, China Construction Bank (
These people said the firm had considered selling up to a 20 percent stake.
Citic, or the China International Trust and Investment Corp, is a pioneer investment agency of the Chinese government, set up to nurture the country's budding market-oriented economy in the early days of economic change.
Citic's banking arm raised US$5.4 billion in April when it sold shares on the Hong Kong and Shanghai stock markets.