Friday, September 19, 2008

CIC official: Single acquisition no solution to U.S. credit crisis

A single acquisition could not solve the systematic U.S. credit crisis, a senior official with the China Investment Corp. said Friday.

The official, who spoke on the condition of anonymity, did not comment when asked by Xinhua if the country's 200-billion-U.S. dollar sovereign wealth fund was in acquisition talks with Morgan Stanley.

Bloomberg cited an unnamed source as saying on Sept. 18 the state-controlled fund may buy as much as 49 percent of the second-biggest independent U.S. securities firm. Morgan Stanley was also reported to be in talks about a possible merger with Wachovia Corp.

"The U.S. is experiencing liquidity strains and it is a systematic credit crisis. No single acquisition could solve it," the official said.

"Even if the CIC intended to buy a stake, it could be very hard now as the purchase of a stake, even one smaller than 10 percent, could be subject to the U.S. government foreign investment review."

The CIC bought a 9.9 percent stake in Morgan Stanley for 5 billion U.S. dollars in December. A purchase of 10 percent or larger stake in U.S. firms is subject to the government foreign investment review.

The U.S. investment bank was also reported to be in talks with CITIC Group, China's largest financial conglomerate, as it was seeking a buyer as the credit crisis deepens.

A public relation official with CITIC Group said he didn't knew nothing of the market talk about the CITIC move.

"We also learned the news on the web. We've received many media calls seeking comments and already reported this to the senior management," the official told Xinhua.


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