Citic won't guarantee buying into Bear Stearns
Updated: 2008-03-17 10:19
China's Citic Securities Co said on March 16 it can't guarantee it will reach a final agreement to buy into US investment bank Bear Stearns after Bear's financial crisis triggered a bailout plan.
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"We haven't signed any formal agreement, we haven't paid any money and we can't guarantee reaching a final agreement in the future," Citic Securities said in a statement.
It said it's still communicating with Bear Stearns on major terms of the deal and due diligence related to the deal hasn't been completed yet.
Citic Securities and Bear Stearns said in October last year that Citic Securities would take a six percent stake in Bear Stearns with an investment of $1 billion, while Bear Stearns would take a two percent stake in Citic Securities with a $1 billion investment.
The Chinese company said it will closely monitor the impact from the US subprime crisis and conduct an overall evaluation of the deal.
It said it will set the direction of its strategic cooperation with Bear Stearns based on the results of its evaluation and the development of the US subprime crisis.
Citic Securities' earnings statement was in line with the comments from its corporate parent China International Trust & Investment Corp, or Citic Group.
Kong Dan, chairman of Citic Group, said earlier in the day that its Citic Securities unit is rethinking its deal to buy into Bear Stearns and would conduct an "overall evaluation" of the deal.
Kong said Citic Securities would be closely watching how Bear is able to respond to a liquidity crisis and remained concerned about the bank's troubles, which began unfolding last year with subprime losses.
Bear Sterns suffered a sharp liquidity crisis late last week. JPMorgan Chase & Co agreed to provide Bear with emergency financing for four weeks, with guarantees from the Federal Reserve, while a permanent solution is sought for Bear's troubles.
Kong said Citic Securities had been in touch with JPMorgan on the matter, but he referred to the communication as "technical" in nature and didn't elaborate.