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The Citic Flip-Flop
On Friday, things seemed clear enough, with Citic issuing a clear denial that it would take an ownership stake in Bear Stearns.
China Citic Bank, meanwhile, also denied that it was in talks to buy a stake in Bear Stearns.
“So far, the company has not held any talks with Bear Stearns or any other related party on a stake purchase, nor does it have any intention or made any agreement,” it said in a statement with the Shanghai Stock Exchange.
“So far, the company does not have any plan to buy a stake in Bear Stearns and the company promises it will not plan for such an event within at least the next three months,” the bank added.
So it came as something of a surprise, on Monday morning, to wake up to this:
China Bank to Buy $1 Billion Stake in Bear Stearns
Citic Securities, a top state-controlled investment bank in China, is planning to invest $1 billion in Bear Stearns and form a joint venture with the firm in Asia, the companies said this morning in a statement.
Do you see the Clintonian dodge here? Blink and you'll miss it, but Friday's denial came from China Citic Bank, while Monday's announcement came from Citic Securities. Both of them are subsidiaries of Citic Group.
I think China needs some principles-based regulators to crack down on this kind of behavior. There was no reason to issue the Friday statement, except misdirection.
