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


“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


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