On Tuesday (October 16th), Dow Jones Newswires spread a rumor about the overseas investment arm of the fastest rising Chinese bank, China Citic Bank Corp.: they might buy a stake in Bear Stearns (NYSE:BSC). This shouldn't come at a surprise, though.
Bear Stearns, one of the most badly hit investment banks during the heat of the subprime crisis, is a bargain after its stock became the worst performing in the industry. Citic Bank, on the other hand, has seen its own market cap quadruple this year alone, categorizing it as a good performer even in Chinese equity market standards, and making it Asia's largest securities firm with a value at $50 billion.
Additionally, as banks grow in mainland China, they feel compelled to learn more about banking (both commercial and investment) from the point of view of developed economies, namely America. China Construction Bank's takeover of Bank of America's Hong Kong office is a case in point. China Minsheng Bank's acquisition of the US-based UCBH Bank is another. So Citic taking over Bear Stearns is no different, is it not?
Oh, but how misinformed were we. Both sides seem too difficult to reach a conclusion. Quoting Bloomberg: Bear Stearns President Alan Schwartz said on Oct. 4 that the company will "weather the storm" and isn't looking for funding from an outside investor. Then the bank issued a statement to the Shanghai Stock Exchange that said it has not held any talks with Bear Stearns or any other relevant parties and no intention or agreement was reached on buying shares of Bear Stearns.
Although no talks were in place for Citic Bank, which means this deal is the farthest way possible from being complete, Bear Stearns may be having some minimal chatter with some potential suitors. Citic Bank then issued this statement: "So far, the company doesn't have any plan to buy a stake in
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