China CITIC Securities shares suspended as Bear Stearns talks continue

BEIJING—China CITIC Securities on Tuesday extended the suspension of its stock trading as talks on collaboration with U.S. investment bank Bear Stearns continued.
The Shanghai-listed CITIC Securities did not reveal details of the collaboration, but reports said the two sides had reached a preliminary agreement involving a cross investment of one billion U.S. dollars each.
The government-controlled CITIC Securities, China’s largest listed securities company, will gain a six-percent stake in Bear Stearns, a leading Wall Street investment and brokerage firm. Bear Stearns is reportedly seeking to acquire a similar stake in CITIC Securities, yet the move must be approved China’s industry watchdog.
The two sides planned to share management expertise and technologies to provide new products and services to get a bigger share of China’s booming financial market.
They are also considering setting up a joint venture to offer a large range of financial services across Asia.
Burnt by this summer’s subprime mortgage crisis, Bear Stearns was forced to merge two of its mortgage subsidiaries and cut hundreds of jobs due to heavy losses from mortgages. Market rumors have Morgan Stanley, Bank of America and HSBC intending to purchase stakes in Bear Stearns.
Earlier media reports said that CITIC Bank, another listed arm of the state-owned conglomerate CITIC Group, was bidding for a stake in Bear Stearns. CITIC Bank denied the rumor on Oct. 18.
“Our company is seeking to tide over the domestic market turbulence by going international,” said Wang Dongming, Chairman of the CITIC Securities.—Xinhua