KEY POINTS:
One of China's state-controlled banks has made a bid for a stake in Bear Stearns, the historic Wall Street finance house where the collapse of two hedge funds in June was an early clue to the seriousness of the credit crisis.
Citic Bank, a mid-sized lender controlled by the investment arm of the Communist government, has held talks over a possible investment, an official told a meeting at the ruling party's congress in Beijing.
It was the first public confirmation that Bear Stearns has been formally examining selling a stake, and came after several months of rumours that have linked the Wall Street firm with bidders in China and the US, including the veteran investor Warren Buffett.
Jiang Dingzhi, vice-chairman of the Chinese banking regulatory commission, made his comments during a discussion of the growing global ambitions of the country's booming banking sector. "The pace of international mergers and acquisitions activity has quickened," he said, citing the bid for a stake in Bear Stearns as an example.
Last month, Jimmy Cayne, the company's embattled chief executive, said Bear Stearns was not looking for an injection of new money, but he said he would consider a partnership deal that brings "geographic, strategic value".
The company has been emphasising emerging markets growth as a way to juice earnings that have been hard-hit by the meltdown in parts of the credit markets.
Citic is a mid-sized lender, majority-owned by the investment arm of the Chinese state council. In April, it raised US$5.4 billion ($7.2 billion) in a dual initial public offering on the Hong Kong and Shanghai stock markets.
China Construction Bank, which is believed to have held talks about a similar deal with Bear Stearns last year, has also been rumoured to have expressed renewed interest in acquiring a stake of up to 20 per cent.
Bear Stearns did not comment on the speculation. It has been badly hit by the bursting of the credit market bubble and laid off 240 staff in its mortgage lending business and promised more job cuts on Wall Street.
