China Citic Bank Corp. has been one of many firms rumored to be contemplating investing in Bear Stearns , after the U.S. investment bank was knifed by the credit crunch.
At today's session of the China Communist Party Congress, a Chinese official confirmed the rumors that the government-run unit of China Citic Group is, in fact, seeking claim to the U.S. bank. The Dow Jones Newswires separately reported that the Chinese bank allegedly has not made significant progress in its bid.
According to ABN Amro's head of Asian financial research, Citic is overcapitalized, which pulls on their return on equity. Investing in BSC is a way to utilize the surplus capital; a problem U.S. banks only wished they had.
Bear Stearns has had a rough ride since deleting 2 hedge funds last summer, costing investors $1.6 billion and enticing a criminal investigation. Since the confirmation of Citic's bid, though, there may be light at the end of the tunnel. Shares of BSC today are currently trading at $123.09, up 2.4 points, an increase of nearly 2%.