Is Morgan Stanley really in talks with Citic, as reported by CNBC?
Not quite, according the FT’s Beijing Correspondent, Jamil Anderlini.
A well-placed person at Citic Securities told the FT that talk of the brokerage having anything to do with a Morgan Stanley bailout or any dealings whatsoever was unfounded market rumour.
Citic is definitely not involved in any plan to recapitalize or invest or provide funding for MS, the person said.
Moreover Citic, one of China’s largest brokerages, is dealing with some problems of its own. Its share price has fallen from Rmb118 last November when it agreed a $1bn deal with Bear Stearns – which was later scrapped when JP Morgan had to bail Bear out – to just over Rmb15 now. The firm’s profits have also collapsed along with the Chinese stock market.
But CIC, the Chinese sovereign wealth fund which already owns 9.9 per cent of Morgan Stanley, is definitely talking to the investment bank.
The President of CIC even travelled to the US on Tuesday accompanied by Morgan Stanley’s China CEO.
CIC was previously part of the Bank of America-led consortium that was considering a takeover bid for Lehman Brothers, alongside JC Flowers & Co.
Christopher Flowers manages about $3.2bn of CIC’s money in a fund dedicated to taking stakes in financial institutions.
It is very unlikely CIC would attempt a takeover of Morgan Stanley on its own, and the prospect of the Chinese government effectively owning one of the last two investment banks left on the Street would startle US regulators, to say nothing of the US Congress.
Related links:
Beijing’s shadowy fund for buying assets – FT