Citic Securities pulls plug on Bear Stearns deal

Citic Securities Co., China's largest securities firm by market value, canceled a proposed US$1 billion investment in Wall Street's fifth-largest securities firm after Bear Stearns was bought by JPMorgan & Chase Co., Bloomberg reported, citing Kong Dan, the chairman of Citic Group, Citic's parent company. The two companies planned to sell financial products and services together in China. Citic also scrapped plans for a Hong Kong-based joint venture with Bear Stearns targeting the rest of Asia. “We are paying great attention to the subprime meltdown trend, but the direction of going international won't change,'' Kong told the agency. However, Citic declined to comment on the fate of a proposed US$1 billion investment by Bear Stearns in Citic Securities, which was expected to be part of any deal between the two companies. Bear Stearns agreed to be taken over by JPMorgan for US$236.2 million Monday when the 85-year-old brokerage found its lines of credit had dried up in the wake of losses racked up through its exposure to collapsing US sub-prime mortgages. The deal valued Bear Stearns at just US$2 a share. Its shares were worth US$120 when it originally negotiated the cross-investment deal with Citic last October.