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.
The statement coincides with Citic Securities' latest final earnings reports showing its 2007 net profit more than quintupled from a year earlier as the domestic stock market's bull run increased trading commissions and underwriting fees.
"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.
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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.