Citic Bank is considering buying a stake in Bear Stearns, which was hard hit by the fall-out from the sub-prime mortgage crisis, the Financial Times reports.
The Times says the potential trade is expected to raise concerns among US nationalists, who are not thrilled about Chinese investment in US assets. The trade also highlights the rising overseas ambitions of China’s leading companies, particularly its largest banks.
There was no hint yesterday regarding what level of stake Citic is willing to purchase, but dealmakers in Asia do not expect US authorities to be able to block any deal if it goes ahead.
Some bankers suggested yesterday that the casual confirmation of Citic’s ambitions was a calculated move by the Chinese to start the process of securing support for the possible investment, the Times says.
Until recently, Chinese banks were, facing huge levels of non-performing loans and endemic corruption.
In the past four years, several overseas financial institutions to acquire minority stakes in Beijing’s leading banks, including: Goldman Sachs acquired a stake in Industrial and Commercial Bank, Merrill Lynch invested in Bank of China and Bank of America bought shares in China Construction Bank. All three Chinese banks later listed, giving their US investors billions of dollars in paper profits.
If Citic does not press ahead with an investment in Bear Stearns, analysts believe it is only a matter of time before another Chinese bank does test the appetite of US lawmakers, the Times says.