China's Citic Securities Co. could not guarantee that it will sign a final agreement to buy shares of the U.S. bank Bear Stearns, the company said on Monday.
"We did not pay any money to Bear Stearns Cos. and the company is not likely to suffer any loss. We can't guarantee reaching a final agreement in the future," said Citic Securities Co. in a statement.
The Bear Stearns name is seen outside their headquarters in New York July 18, 2007. CITIC Securities Co., China's top brokerage by earnings, could not guarantee that it will sign a final agreement to buy shares of the U.S. bank Bear Stearns, the company said on Monday. (File Photo)
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Bear Stearns and Citic Securities, China's largest brokerage by earnings, agreed last October to a cross-investment plan.
Under the agreement, Citic was to invest 1 billion U.S. dollars for about 6 percent of Bear Stearns, while Bear Stearns would take a 2 percent stake in Citic Securities
The statement closely followed the company's newly released final earnings reports of 2007, which showed that Citic's net profit soared fivefold as the nation's stock market almost tripled.
Citic's net profit totaled 12.39 billion yuan (1.77 billion U.S. dollars), or 4.01 yuan per share. Revenue hit 30.8 billion yuan, an increase of fivefold year-on-year.
As of 2007, Citic's gross capital stood at 189.65 billion yuan, almost double that of the previous year, and its net capital topped 50 billion yuan, according to its report.
Share prices have slumped since the cooperation agreement was sealed in October, as world financial markets have been affected by the U.S. sub-prime crisis.
Bear Stearns suffered a sharp liquidity crisis late last week and its share price plummeted as much as 40 percent early Friday.
To ease the strains, J.P. Morgan Chase & Co. agreed Friday that it would provide Bear with emergency financing for four weeks with guarantees from the Federal Reserve, while a permanent solution was sought.
Citic said that it would closely monitor the impact from the U.S. sub-prime crisis and conduct an overall evaluation of the deal.
Citic sources declined to discuss whether the company would withdraw from the planned acquisition.
Source:Xinhua
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