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Fri, Apr 03, 2009 - Page 10 News List

Bank of China cancels bid

AFP , SHANGHAI

Bank of China (中國銀行) said yesterday it had abandoned its bid to buy a stake in French private bank Edmond de Rothschild Finance Co after Chinese regulators failed to approve the deal.

Bank of China, one of the country’s big four state banks, announced in September it would pay 236 million euros (US$342 million) for a 20 percent stake in the French private bank.

“The agreement became invalid automatically as the deadline passed,” Bank of China spokesman Wang Zhaowen (王兆文) said.

Bank of China had been forced to extend the original deadline for the deal to April 1 from Dec. 31 after the government failed to grant its approval before the initial deadline.

Wang said the bank would not seek a further extension, but remained committed to developing its private banking business and would “seek other ways of cooperation” with the French bank.

He did not elaborate further.

A spokesman for Edmond de Rothschild Finance Co in Paris confirmed that the deal would not go ahead because of opposition from Chinese regulators.

However, the spokesman said the French bank had decided to abandon proceedings because it did not want to renegotiate the price and extend the bid deadline.

Nevertheless, the spokesman said Edmond de Rothschild Finance Co hoped to “continue cooperation” with Bank of China.

“Cooperation should go on because relations between the two banks are excellent,” the spokesman said.

The spokesman also said that the failure of the deal to go ahead “does not cause any problem for us because we do not need any fresh capital.”

China has tightened up scrutiny of overseas investments by domestic institutions after several foreign investments by Chinese financial groups over the past two years have led to huge paper losses.

China’s US$200 billion sovereign wealth fund, China Investment Corp (中國投資公司), paid US$5 billion in 2007 for a 9.9 percent stake in Morgan Stanley, which has since lost two-thirds of its market value.

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