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Bank of China says abandoning Rothschild deal
Shanghai (AFP) April 2, 2009 Bank of China said Thursday it had abandoned its bid to buy a stake in French private bank Edmond de Rothschild Finance Company after Chinese regulators failed to approve the deal. Bank of China, one of the country's big four state banks, announced in September it would pay 236 million euros (342 million dollars) for a 20 percent stake in the French private bank. "The agreement became invalid automatically as the deadline passed," Bank of China spokesman Wang Zhaowen told AFP. Bank of China had been forced to extend the original deadline for the deal to April 1 from December 31 after the government failed to grant its approval before the initial deadline. Wang said the bank would not seek a further extension but remained committed to developing its private banking business and would "seek other ways of cooperation" with the French bank. He did not elaborate. A spokesman for Edmond de Rothschild Finance Company in Paris confirmed to AFP that the deal would not go ahead due to opposition from Chinese regulators. However the spokesman said the French bank had decided to abandon proceedings because it did not want to renegotiate the price and extend the deadline. Nevertheless, the spokesman said Edmond de Rothschild Finance Company hoped to "continue cooperation" with Bank of China. "Cooperation should go on because relations between the two banks are excellent," the spokesman told AFP. The spokesman also said that the failure of the deal to go ahead "does not cause any problem for us because we do not need any fresh capital". China has tightened up scrutiny of overseas investments by domestic institutions after several foreign investments by Chinese financial groups over the past two years have led to huge paper losses. China's 200-billion-dollar sovereign wealth fund, China Investment Corp., paid five billion dollars in 2007 for a 9.9 percent stake in Morgan Stanley, which has since lost two-thirds of its market value. Last year, China's Ping An Insurance Group said it would book a potential loss of 2.3 billion dollars for its investment in European financial group Fortis NV, which was hit by the global financial crisis and dismantled. Share This Article With Planet Earth
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