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Chinese Bank Drools Over Bear Stake

A possible suitor expresses interest in the struggling firm.

China's Citic Bank said it is interested in purchasing a stake in troubled

Bear Stearns



Bank President Chang Zhenming confirmed the Chinese bank's interest during a Communist Party Congress in Beijing today, according to a report by



Citic's comments come after weeks of rumors that Bear President Jimmy Cayne has been courting suitors to draw a cash infusion for the New York-based investment bank. Bear has been hobbled since a pair of its hedge funds collapsed this summer due to missteps in securities tied to mortgages provided to buyers with dodgy credit.

Last month,

The New York Times

reported that in addition to Citic other banks showing a desire to take as much as a 20% stake in Bear included


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and China Construction Bank.

Omaha billionaire Warren Buffett was also cited among the list of potential investors, but most observers view his intervention as unlikely, given the investor's preference for transparent, value-priced companies.

The smallest of the brokerage firms with a market capitalization of a little more than $17 billion, Bear has been hard hit by eroding confidence in its liquidity and a general credit crunch that has seized the market.

Third-quarter earnings cratered 61% from a year ago. The bank has slashed its mortgage origination workforce by 40% this year.

Amid the turmoil, Cayne has denied that he has specifically been seeking an outside investor, but he has not ruled out Bear's willingness to take an external cash infusion if the buyer added value to the company.

Of paramount importance to a beleaguered Bear is a buyer able to provide the bank with a broader geographic footprint, analyst Dick Bove of Punk Ziegel has noted in numerous analyst reports.

Chang did not provide additional details about a possible investment in Bear to reporters.

A call to a Bear Stearns spokesman was not returned.

Bear stock rose $1.39 to $122.08.