China's CITIC says stake may be same in new Bear deal

By Langi Chiang

BEIJING (Reuters) - China's CITIC Securities hopes to adjust its share swap deal with Bear Stearns soon but is not looking to raise its stake in the U.S. investment bank, CITIC Group Chairman Kong Dan told reporters on Wednesday.

Bear Stearns Cos BSC.N and CITIC Securities (600030.SS: Quote, Profile, Research, Stock Buzz), China's largest brokerage, have said they are renegotiating the terms of their October tie-up after both firms' shares were knocked badly in turbulent financial markets.

But contrary to earlier reports that CITIC would try to raise its holding in Bear Stearns, Kong suggested the Chinese brokerage might maintain the size of its 6 percent stake while paying less than the $1 billion that was its original price tag.

"Prices will be cut," he said, speaking on the sidelines of a government meeting in Beijing.

Asked if CITIC would try to raise its stake to 9.9 percent, a threshold above which foreign investments require intense U.S. government scrutiny, he replied: "At this point, we have no such idea.... It's not true."

Shares of CITIC Securities and Bear Stearns have both fallen about 40 percent since October 22, when the two parties announced plans to invest $1 billion in each other and form a joint banking venture in Asia.

"The framework of the original agreement will basically remain the same," Kong said. "It's only that prices have changed and the adjustments will make them more reasonable."

Bear said last week that talks between the two were continuing.